Dangote Cement’s Manufacturing Costs Hit ₦1.65tn Amid Rising Energy Prices

Dangote Cement Plc has reported a sharp increase in manufacturing costs, which rose by 63.5 per cent to ₦1.645tn in the 2024 financial year, up from ₦1.006trn in 2023.

The surge was largely driven by the devaluation of the Naira, which significantly impacted cash costs.

According to the Group’s financial statement seen by THE WHISTLER, a key contributor to the cost increase was fuel and power consumption, which jumped by 70.3 per cent to ₦679.9bn.

Additionally, total selling and administrative expenses rose by 70.7 per cent to ₦839.2bn in 2024, primarily due to a 73.1 per cent surge in haulage expenses, attributed to the rising cost of Automotive Gas Oil (AGO). Inflationary pressures and currency devaluation further exacerbated the situation.

Despite these challenges, Dangote Cement recorded a strong sale with total revenue climbing 62.2 per cent to ₦3.58trn in 2024, compared to ₦2.21trn in 2023. This growth was driven by increased sales volumes in Nigeria and price adjustments across certain operations to align with inflationary trends. Sales volumes in Nigeria increased by 7.9 per cent to 17.7m metric tonnes (Mt) in 2024, up from 16.4Mt in 2023.

The company attributed this rise to enhanced sales and marketing strategies that boosted its market presence amid improving economic activity.

Consequently, revenue from Nigerian operations surged by 69.0 per cent to ₦2.19trn in 2024, up from ₦1.30trn in the previous year.

On the other hand, pan-African volumes saw a slight decline of 1.1 per cent to 11.1Mt due to adverse weather conditions in Tanzania, coupled with election-related uncertainties in Senegal and South Africa.

However, revenue from these markets rose by 60.0 per cent to ₦1.48trn, while Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increased by 30.9 per cent to ₦345.3bn
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Despite foreign exchange losses amounting to ₦249.3bn due to the sharp currency devaluation, Dangote Cement’s profit after tax grew by 10.5 per cent to ₦503.2bn in 2024.

Earnings per share increased by 12.3 per cent to ₦29.74, compared to ₦26.47 in 2023. However, the effective tax rate rose to 31.3 per cent in 2024 from 17.6 per cent in 2023, following the expiration of tax pioneer status for some Nigerian operations.

Chief Executive Officer, Arvind Pathak, said, “We wrapped up 2024 with strong momentum, driven by our focus on operational efficiency and excellence. Our Group volumes grew by 1.6 per cent year-on-year, reaching 27.7Mt, driven by a strong recovery in Nigeria, where we improved efficiency and boosted sales growth by 7.9 per cent.
He noted that a major milestone was the launch of the Digital Management System (DMS), which allows customers to independently manage sales transactions and track deliveries remotely.

“Over 80 per cent of our customers actively use this platform, and we aim to increase adoption to 90 per cent. Despite macroeconomic challenges, both globally and domestically, we remained committed to innovation and value creation, delivering strong returns for our stakeholders.

“Group revenue grew by 62.2 per cent to N3.58trn, driven by a combination of volume growth and price adjustments to reflect inflationary trends.

As a result, EBITDA reached a record high, surpassing the ₦1trn mark for the first time at ₦1.38trn, while profit after tax (PAT) grew by 10.5 per cent year-on-year, totaling N503.2bn.

“Reflecting our strong financial performance, the Board has proposed a dividend of ₦30.00 per share for the 2024 financial year.

“By leveraging our strong export-to-import strategy, Dangote Cement achieved a record 31 clinker shipments from Nigeria to Ghana and Cameroon, driving a 69.1 per cent increase in Nigerian exports and strengthening our commitment to Africa’s cement self-sufficiency.

“We also made significant strides in sustainability, particularly in alternative fuel investments. Our Thermal Substitution Rate (TSR) improved to 10 per cent, with 11 alternative feed systems installed across our plants, enabling greater flexibility in energy sourcing. Recognizing our sustainability efforts, the Carbon Disclosure Project (CDP) upgraded Dangote Cement’s rating to B across both climate and water categories.

Looking ahead, he said the company remain focused on strengthening its market position, enhancing productivity, and driving economic growth across its operating regions.

“We are now set to commission our 3Mta Cote d’Ivoire grinding plant in 2025, further expanding our footprints to capitalise on the high-growth African cement market,” he said.

Dangote Cement’s Manufacturing Costs Hit ₦1.65tn Amid Rising Energy Prices is first published on The Whistler Newspaper