Dangote Cement posts lower 2014 profit due to lower demand

Dangote Cement’s pretax profit fell 3.2 percent to 184.68 billion naira (US$928 million) last year due to a gas shortage to fire its plant and low demand after prolonged wet weather, the company said on Thursday.

Dangote Cement, Africa’s biggest cement company – and a subsidiary company of Dangote Group, said sales volumes in its main Nigerian market fell 3.2 percent to 12.87 million tonnes, weaker than the decline in the overall market of 0.8 percent to 21 million tonnes.

It expected market growth in Nigeria to be muted this year owing to the presidential elections and currency worries, worsened by the fall in government revenues triggered by the plunge in world oil prices.

Full-year revenues for 2014 climbed to 391.63 billion naira (US$1.97 billion) during the 12-month period to December 31, up from 386.17 billion naira (US$1.94 billion) the previous year, due to growth from Dangote’s other African operations, the company said.

The cement company said unreliable gas supply at its Obajana plant, which accounts for around 35 percent of the market, constrained production, while prolonged rainfall in the second half of last year led to a slowdown in construction.

“Revenue increased mostly due to South African operations,” it said in a presentation, adding that long term growth in Nigerian market remains robust at more than 10 percent.

Shares in Nigeria’s biggest cement firm by market capitalization shed 0.82 percent to 152 naira (US$0.76) each on Thursday. They have fallen 23.7 percent so far this year, under-performing the main index which is down 13.7 percent.

The firm, owned by Aliko Dangote, cut the 2014 dividend payment to 6 naira (US$0.03) per share, down from 7 naira (US$0.035) it paid a year earlier.

Dangote Cement expects to slow capital expenditure this year to 191 billion naira (US$960 million), down from 217.2 billion naira (US$1.09 billion) last year, as expansion projects across the continent gather pace.

New cement plants in Cameroon, Zambia, Ethiopia and Tanzania are to be commissioned this year.

Source: Reuters