Despite headwinds, Dangote, BUA Cement, Lafarge to Pay Shareholders N609.5bn Dividend

Kayode Tokede

Despite the tough operating environment, three cement manufacturing companies in Nigeria have proposed N609.5billion as dividend pay out to their shareholders for the financial year ended December 31, 2023.

This is 30.3 per cent increase when compared to N467.85 billion the three listed cement makers paid to shareholders in 2022 financial year.

The three cement manufacturing companies are: Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc.

Analysis of the companies’ financial results showed that Dangote Cement Plc’s management proposed a dividend of N30.00 per share in 2023 from N20.00 per share.

This translates into N511.22 billion in 2023, an increase of 50 per cent from N340.8 billion in 2022 financial year.

The proposed N30.00 per share, dividend, according to the company was in line with the promise of Chairman, Dangote Cement, Aliko Dangote to enhanced return on Investments of shareholders.

For Lafarge Africa and BUA Cement, their management proposed a dividend of N1.9 and N2.00 per share respectively, representing N30.6 billion and N67.7 billion their shareholders will take home for the period under review.

Capital market analysts have commended the three cement producers for maintaining dividend pay out to shareholders amid macro economic headwinds.   

Speaking, the Vice Chairman, Highcap Securities Limited, Mr. David Adnori expressed further that the sector last year witnessed severe foreign exchange losses, yet the management acted prudential in reducing cost and improving on bottom-line in their quest to reward shareholders. 

He added that the dividend declared was below these companies Earning Per Share (EPS), “yet the dividend should be applauded by shareholders due to economy situation in the country.”

Commenting on Dangote Cement’s 2023 performance, analysts at Cordros Research said, “Dangote Cement sales performance in the Pan African region was remarkable and we like the business’ resilience in ensuring profitability in the face of slow sales in its Nigerian operations amid inflationary and currency pressures.

“For 2024, we envisage that Pan African sales will maintain its uptrend while higher cement prices will remain the key driver of turnover in Nigerian operations. Furthermore, we point to Dangote Cement’s costs controlling efforts, including fuel mix optimisation, shifting towards alternative fuels and gradual transition from diesel delivery trucks to full Compressed Natural Gas (CNG) trucks and believe these initiatives will help sustain margins in the near term.”

Commenting on the cement industry, CardinalStone in a report explained that, “As Nigeria’s cement industry reflects on a challenging 2023, characterised by demand-stifling events like the cash crunch orchestrated by a poorly executed currency redesign policy, the material currency devaluation, and bouts of heavy rainfall, its hope for a gradual recovery in 2024 feeds off the return to relative macroeconomic normalcy and early gains from tough policy reforms.

“In 2024, the Nigerian cement industry is expected to benefit from renewed government focus on infrastructure development and construction projects, which could stimulate demand for cement products. With increased budget allocations to critical sectors and ambitious infrastructure initiatives (N1.32 trillion to infrastructure, which represents five per cent of the total FG 2024 budget), the construction industry is likely to experience a resurgence. Cement manufacturers, in response, are beginning to recalibrate their production strategies in the form of capacity expansion and improved efficiency to meet the anticipated rise in demand.

“While challenges may persist, the outlook for Nigeria’s cement industry in 2024 is one of cautious optimism, with potential growth opportunities emerging amidst the recovery phase.”

The Group Managing Director, Dangote Cement, Arvind Pathak in a statement said, “This positive full-year outcome is a combination of the strength in the diversity of our operations across Africa and our sustained drive to contain cost amidst an accelerating inflationary environment.”

“Despite the challenging macro economic conditions, 2023 was yet another testament to the effectiveness of our diversification strategy. Our diverse operations acted as a cushion, providing resilience to country-specific risks. Pan-African volumes were up 12.7 per cent and now account for 41.2 per cent of Group volume. Consequently, pan-African revenue increased by a record 123.2 per cent to N925.9 billion, while EBITDA surged by over four-fold to 263.7 billion.”

He added, “In response to the heightened inflationary environment, we implemented new and innovative business strategies that helped to drive up revenues, contain costs, and protect margins. These initiatives included fuel mix optimisation, propelling the use of alternative fuels to replace more expensive fossil fuels. We also began the phased transition from diesel power trucks to full CNG trucks.

“Looking ahead, following the commissioning of our 0.45Mta grinding plant in Takoradi, we are focusing on our “export to import” strategy in West and Central Africa, while concurrently optimising assets in Eastern Africa. Our strategy remains centered on enhancing our value proposition through the production of high-quality cement and delivering sustainable value to our stakeholders.”

The CEO of Lafarge Africa, Lolu Alade-Akinyemi said, “The fundamentals of our business remain strong. In spite of extremely challenging macroeconomic head winds, we grew the top line by 8.6% and improved Operating Margin from 22.6per cent to 25.3per cent in 2023. In the face of very material FX devaluation losses and higher effective tax rate, Profit After Tax declined YoY by 4.7per cent.

“Our performance was largely impacted by spiralling inflation and unprecedented Naira devaluation, with the attendant pressure on energy and supply chain costs.

Despite these challenges, we continue to maintain a strong free cash flow position and a strong balance sheet, positioning us for sustainable growth over the medium to long term. We are committed to delivering sustainable value to all stakeholders in the coming years, as we have done historically.”

The Managing Director/ CEO, BUA Cement, Mr. Yusuf Binji, said, “Clearly, the operating environment in 2023 was challenging, given the different headwinds confronted with at the start of the year and especially with the devaluation of the Naira. During the year, we launched the maiden edition of the BUA Cement Scratch and Win promo., among other initiatives, which saw BUA Cement further increase its share of the market and resulted to a 27.4per cent rise in revenues to N460 billion from N361 billion in the prior year. 

“In addition, we cold commissioned the new 3mmtpa lines at the Sokoto and Obu Plants, activated a new 70MW gas power plant in Sokoto and eagerly await the activation of the 70MW gas power plant at Obu during the first quarter of 2024. Apart from these, we took delivery of over 500 trucks to support our distribution activities, which further deepened our market presence.”