Dangote earns over 50% profit from every ₦1 cement sales

DANGOTE Cement Plc earns over 50 per cent profit from every ₦1 sales on its product, The ICIR can report.

An analysis of the company’s five-year financial statements, relative to BUA Cement Plc and Lafarge Africa Plc, revealed that Dangote Cement had consistently earned over 50 per cent profit from every ₦1 sold.

Nigerians are already suffering from the increasing cost of cement, which has skyrocketed recently and is fuelling the rise in rentals and the cost of construction in the building industry.

Dangote Cement is owned by Africa’s richest person, Aliko Dangote; Abdulsamad Rabiu owns BUA Cement; and Holcim Group, a Swiss multinational company, controls Lafarge Africa.

The price of a 50-kilogram bag of cement has risen above ₦10,000 and is getting towards ₦15,000, raising severe concern as most building projects suffer setbacks and landlords gradually increase rents.

In analysing the cement giants’ audited financial statements for 2019 to 2023, The ICIR discovered that Dangote earned more revenue than it spent on production costs as its gross profit margins stayed above 50 per cent.

A gross profit margin is a percentage of a company’s revenue that it retains after subtracting direct expenses, such as labour and materials. It is a vital profitability measure that looks at a company’s gross profit compared to its revenue.

In 2019 and 2020, Dangote Cement earned over ₦0.57 from every ₦1 sales, ₦0.60 in 2021, ₦0.59 in 2022, and ₦0.54 in 2023.

Simply, at a ratio of 60 per cent in 2021, it means for every ₦1 generated, Dangote Cement retained ₦0.60 and attributed ₦0.40 to its cost of sales.

The cost of sales includes all the expenses directly related to producing the goods.

Over the review years, Lafarge Africa increased its gross profit margins to above 50 per cent. In 2019, the company earned ₦0.26 in revenue from every ₦1 sales; it rose to ₦0.47 in 2020, ₦0.49 in 2021, ₦0.53 in 2022, and down to ₦0.51 in 2023.

BUA Cement had not only stayed below 50 per cent in revenue from every ₦1 sales but had also reported relatively steep gross profit margins. It moved from ₦0.47 in 2019 to ₦0.46 in 2020, ₦0.47 in 2021, ₦0.45 in 2022 and ₦0.399 in 2023.

Late last year, BUA Cement initiated a price slash in the bag of cement from about ₦5,500 to ₦3,500.

Experts have told The ICIR that the much-anticipated reduction in the price of a bag of cement to N3,500 by BUA Cement, effective October 1, 2023, would have had immediate and far-reaching benefits. However, the reverse had been the case, as the company’s cement price had increased significantly.

The group head of corporation communications at Dangote Industries Limited, Anthony Chiejina, did not pick up calls and has yet to respond to an enquiry about the company’s cement product hike.

The head of corporate communications at Lafarge Africa, Ginikanwa Frank-Durugbor, responded, “While limestone which is part of our raw materials is locally sourced, we do have significant exposure on other raw materials that are imported or impacted by FX (foreign exchange) including gypsum, gas, spare parts and other ancilliary input costs and services necessary for our operations in Nigeria.

“At Lafarge Africa Plc, we remain committed to ensuring our products are available for our customers at the right price. We maintain our promise of ensuring the consistent quality of all our products and solutions.”

The ICIR could not reach BUA Cement for comment on the continous price hike despite the company’s announcement of price slash.

The table below shows the three cement companies’ revenues, cost of sales, gross profit and calculation of the gross profit margins for the review years.

Dangote Cement Plc (figure in N’m)
2023 2022 2021 2020 2019
Revenue 2,208,090 1,618,323 1,383,637 1,034,196 891,671
Cost of Sales 1,006,278 662,890 551,019 437,970 379,989
Gross Profit 1,201,812 955,433 832,618 596,226 511,682
Margin 0.54427673 0.59038461 0.60176043 0.57651161 0.57384618
Lafarge Africa Plc (figure in N’000)
2023 2022 2021 2020 2019
Revenue 405,502,712 373,244,938 293,086,183 230,572,922 212,999,066
Cost of Sales 198,786,889 177,023,232 150,505,605 121,716,515 157,046,768
Gross Profit 206,715,823 196,221,706 142,580,578 108,856,407 55,952,298
Margin 0.50977667 0.52571833 0.48648004 0.47211271 0.262688
BUA Cement Plc (figure in N’000)
2023 2022 2021 2020 2019
Revenue 459,998,999 360,989,105 257,327,091 209,443,487 175,518,326
Cost of Sales 276,043,486 198,379,891 136,402,954 113,964,695 93,075,293
Gross Profit 183,955,513 162,609,214 120,924,137 95,478,792 82,443,033
Margin 0.39990416 0.45045463 0.46992385 0.455869 0.46971182
Data source: Dangote, BUA and Lafarge Africa’s financial statements, 2019-2023

Reps summons Dangote, BUA

On Wednesday, March 13, the House of Representatives raised a motion to summon the major cement manufacturers before its committee to deliberate on ways out of the hardship arising from the high cost of cement.

The lawmakers are concerned that despite all the raw materials and other factors of cement production being sourced locally, the price keeps rising, questioning the rationale for the arbitrarily increasing costs.

The motion, ‘Arbitrary increase in cement price by cement manufacturers in Nigeria,’ was moved by Gaza Gbefwi from Nasarawa State and Ademorin Kuye from Lagos State.

Gbefwi argued that cement manufacturers have increased the price of their products by up to 50 per cent, leading to sharp hikes in building blocks, the cost of building, and consequently, the price of rent across the country.

The raw materials for the manufacturing of cement, including lime, silica, alumina, iron oxide, and gypsum, are all sourced locally and could not have been affected by exchange rate volatility, The ICIR reports.

Gbefwi continued that factors and elements of cement production were sourced locally and have not changed significantly year-on-year, stressing that cement manufacturers are capitalising on exchange volatility to arbitrarily increase the product’s price while the production cost has stayed the same since last year.

(See the table for the relative changes in cost of production, otherwise known as cost of sales).

He alleged that a small but powerful “cement cabal” was unconsciously inflicting hardship on Nigerians as rent prices and associated services increased.

After other members’ contributions, the Lower Chamber mandated its Committees on Solid Minerals Development, Commerce, Industry and Special Duties to investigate the arbitrary increase in the price of cement by manufacturers in the country like Dangote Cement and BUA Cement.

‘Hike in cement price has started to impact on rentals’

A real estate expert and facility manager, Stephen Jagun, told The ICIR that the surging price of cement is already forcing landlords to increase their rentals.

He lamented that the cement price hike negatively impacts rentals even in the short run.

“As we speak, more people are graduating, getting married, getting jobs, and needing accommodations. Demand for accommodation is rising, but supply has been inadequate. Supply will now be pressured by demand, and in that situation, rent will increase, which is already occurring.

“Rent is becoming outrageous, particularly in the lower sector. If you increase my rent in Ikoyi, I will go to the next neighbourhood closer to Ikoyi if I can’t afford it.”

Jagun explained that demand for accommodation would continue to push rentals for people living in places like Ikorodu, Agege, Egbeda and other lowbrow areas in Lagos State.

“In most of those places, the landlords take the rule to their hands. If you don’t pay quickly, they quit you because somebody would even be waiting to occupy the place and pay more.

“On the rich axis, it is either you remain there if you can still afford it, but if you don’t want to be embarrassed, you quickly leave for cheaper accommodation elsewhere.”



    The Lagos State Government plans for one-month rentals, but Jagun said the initiative might fail. “You (Lagos State) are not supplying, and you want to dictate the rent; that plan will create a black market.”

    He noted that cement prices have spiked, and every building material cost has risen equally.

    He asserted that most construction works have been put on hold due to increasing building materials costs.

    “What most contractors do now is to request the owner of the job to provide the materials and pay them for their labour,” adding that others have resulted in using old stocks that could be remodelled.

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