Dangote Cement shows impressive performance amid challenges
By Philemon Adedeji
Dangote Cement remains the leading cement company in Africa as it is well-positioned for a positive and sustainable future, and is resolute in transforming Africa, while creating sustainable value for shareholders.
For the 2021 financial year, Dangote Cement recorded more sales than what it achieved in 2020. Such a sale can be recognised as a good sale, because the company makes a huge profit during the period. Obviously, Profit after tax for the year was higher than that of the preceding year.
With the growth in profit, Dangote cement paid shareholders a dividend of 20 per cent increase to N20 per share in 2021 financial year as against N16 per ordinary 50 kobo dividend payout to shareholders in 2020 financial year.
Growth indices
For its 2021 financial year, the cement manufacturing company recorded a 34 per cent increase rate in its revenue (This simply means that the sales figure rose significantly better than it did in the corresponding year of 2020). Such turnover inched weight to N1.383 trillion in 2021, up from N1.034 trillion in the preceding year.
It is worthy of note that this 34 per cent growth rate, is considered an impressive performance and it is good when compared with the industry average revenue for the same period under review.
The group’s aggregate revenue was driven by broad-based expansion across Nigeria that gained 38 per cent and Pan African increased by24.7 per cent operations.
For Nigeria operations, the revenue growth was driven mainly by higher price per tonne (+18.1per cent y/y) and volumes (16.8 per cent y/y to 18.6MMT).
Profit before tax (PBT) growth rate followed the right pattern because of the growth that occurred. The company profit before tax jumped significantly to a 44.2 per cent to the sum of N538.4 billion in the previous year from N373.3 billion in the preceding year.
Total assets reported by the company for the year 2021 grew to N2.392 trillion from N2.022 trillion in 2020, representing an increase of 18.3 per cent, the total liabilities deployed by the company for the company for 2021 year grew to N1.408 trillion, 24.4 per cent more than the N1.131 trillion liabilities deployed in 2020
Dangote cement earnings per share recorded increased significantly to 32 per cent from N16.14 in the corresponding year of 2020 to N21.24 in the previous year of 2021
The company recorded operating profit which revealed a significant jump of 50.6 per cent to the sum of N582.5 billion in 2021 from the sum of N386.7 billion in 2020.
Financial position
Non-Current assets deployed by the company in 2020 increased to N1,472.9 trillion from N1,390 billion at 31st, December 2020. This was mainly as a rise of addition to property, plant and equipment which were partially offset by depreciation. Increase in current liabilities is driven by current income tax charge, trade payables and amounts owed to related parties for trucks and the exchange impact due to depreciation in Naira
Profitability ratios
At a glance, from the analysis, Dangote Cement recorded profitability for the 2021 financial year, however, while comparing to its preceding year result, almost all the parameters revealed growth in terms of performance
The profit margin of the company grew to a 48.9 per cent in 2021 from 36.1 per cent in 2020.What this means for every N100 earned for the company in the course of the year, N38.90 of it can be translated in to profit, higher than N36.10 in the preceding year of 2020
Also, According to the analysis carry out on Return on Assets (ROA). ROA appreciated to a 22.5 per cent in 2021 from 18.5 per cent in the preceding year of 2020. Analysis shows that every N100 worth of assets employed by the company in the course of 2021 could only contribute N22.50 to the profit before tax, higher than N18.50 in 2020
Conclusion
Chairman of the company, Aliko Dangote, in a statement said that “Over the last decade, Dangote Cement has recorded exponential growth across all areas.”
According to him, Group volumes are now at almost 30Mta, our capacity has tripled to 51.6Mta and we export cement from five countries across Africa.
As the volatile global environment propels us into a new era of uncertainties, we are fortunate that the last two years have taught us resilience, adaptability and grit. These values are what we need to face unpredictable times in the future.
Dangote said in January 2022, the Company completed the second tranche of its buy-back programme as Dangote Cement has now repurchased 0.98 per cent of its outstanding shares, saying this share buy-back programme reflects the Company’s unwavering commitment to creating value and identifying opportunities to return cash to shareholders.
He also noted that, “We began operations in our new 3Mta Okpella plant in Edo state in 2021, where we are successfully ramping up production and have contributed to creating a new industrial hub.
“We are actively deploying our alternative fuel strategy across all countries of operations, to optimize energy efficiency, reduce reliance on fossil fuels and ultimately reduce CO2 emission. Whilst we focused our efforts on meeting the robust demand of our local market in Nigeria, at the expense of our export markets, we still made significant progress in our cement and clinker exports.
“In 2021, we exported seven ships of clinker out of Nigeria and exported cement from five of our operations. Our vision is for West and Central Africa to be cement and clinker self-sufficient, while making the regional and continental free trade agreements a reality.”
He added that along with the Company’s focus on strategy, it made progress on the effectiveness and diversity of its Board with the appointment of Ms. Halima Aliko-Dangote to the Board as a Non-Executive Director effective 26th February 2022, bringing female Board representation to 27 per cent, from 20 per cent in 2020 in addition to the six different nationalities and five independent non-executive directors on our Board.
He emphasised, “We continue our sustainability and governance efforts with our 7 Sustainability Pillars – ‘The Dangote Way.’ The 7 Pillars: cultural, economic, institutional, financial, environmental, operational and social, provide the appropriate framework in which we have embedded our corporate values and strategic objectives.”
He said, “Our strategy in 2021 focused on energy transition, which is a crucial enabler of sustainable development and climate resilience on the continent. We have increased our focus on alternative fuels in our energy mix. We are actively investing in installing mechanical multi-fuel systems that can process diverse types of wastes.”
Outlook for Dangote Cement in 2022, Group Managing Director/Chief Executive Officer of Dangote Cement, Michel Puchercos said, “Our goal to be the partner of choice for those transforming Africa, while creating sustainable value for our stakeholders remains firm and clear.
“Despite operating in a challenging and fast-moving environment, Dangote Cement consistently delivers superior profitability to the shareholders. The robust demand experienced across the continent despite the COVID-19 related challenges, confirm the powerful potential of these markets.”
