The cement manufacturing company 2021 performance was largely driven by higher sales volumes, as well as improved cost management during the period which drove margin expansion.
During the full year ended December 31, 2021 period, Dangote cement revenue increased by 34 per cent, supported by 51,550’000 tonnes surge in Cement production and bagging capacity volumes in 2021 as against 48,550’000 tonnes recorded in 2020. The company’s sales volumes rose by nearly 14 per cent to 29,271’ 000 tonnes in 2021 from25,7200’000 tonnes reported in 2020.
Disaggregation of revenue from contracts with customers revealed that domestic sales (Nigeria) grew by 32 per cent to N1.33trillion in 2021 from N1.01trillion recorded in 2020 as export sales closed 2021 at N64.51billion, an increase of 31 per cent from N30.64billion reported in 2020.
The breakdown revealed that domestic sales in Nigeria grew by 35 per cent to N956.96billion in 2021 from N709.09 billion in 2020 , while domestic revenue generated from Pan African countries gained 23.5 per cent to N369.3billion in 2021 from N298.9billion in 2020.
The substantial growth in 2021 reflects sustained strength in construction activities post-Covid pandemic in Nigeria and Sub-Saharan Africa which continues to spur cement demand across Dangote Cement markets.
The Cement manufacturing company recorded a 26per cent increase in Cost of Sales during the period to N551.02 billion from N437.97 billion reported in 2020.
As expected, the pressure on Cost of Sales mostly emanated from material consumed, Fuel & power consumed and plant maintenance costs . In the year under review, Dangote Cement reported nearly 30 per cent increase in material consumed to N175.4billion in 2021 from N134.9 billion in 2020, while fuel & power consumed grew by 34.4 per cent to N196.6billion in 2021 from N146.34 billion in 2020. In addition to production cost of sales, plant maintenance also grew by 37 per cent to N42.2billion in 2021 from N30.7billion in 2020.
This was a consequence of Naira depreciation in Nigeria, persistent price pressure on energy sources and production inputs. As revenue growth outpaced growth in Cost of Sales, Gross Profit grew by 40 per cent to N832.62billion in 2021 from N596.23 billion in 2020 as Gross Margin expanded to 60.2 per cent 2021 from 57.7 per cent in 2020..
Dangote Cement’s gross margin came under more pressure from energy costs in second quarter of 2021 at 58.6 per cent compared with 61.5per cent in first quarter of 2021), which was attributed to global supply chain bottlenecks which impacted freight costs of imported energy (coal) and material (gypsum) inputs.
Over 2021, total operating expenses (OPEX) grew by nearly 20 per cent to N256.01billion in 2021 from N214.06 billion in 2020 owing to a 25 increase in Selling and distribution expenses that closed 2021 at N191.7billion from N153.7billion in 2020, and a seven per cent rise in Selling and distribution costs that moved from N60.34 billion in 2020 to N64.35billion in 2021.
However, as Gross Profit growth printed ahead of OPEX growth, Dangote Cement proved operationally efficient with OPEX/Sales ratio contracting from 21.24 per cent in 2020 to 19.3 per cent in 2021. Non-core business income grew by 31 per cent to N6.2billion in 2021 from N4.75billion in 2020.
In all, the Group reported 51per cent increase in profit from operating activities to N582.49billion in 2021 from N386.7billion in 2020..
Speaking on the results, Chief Executive Officer, Dangote Cement Michel Puchercos said, “We are pleased to report a solid set of the results for the full year 2021. Group volumes for the year were up 13.8 percent and Group EBITDA was up 43.2 percent, to N684.6 billion at a 49.5 percent margin. I am delighted to report that Dangote Cement experienced its strongest year across all line items, with a record PAT of N364.4 billion up 32.0 percent.”
“Our business model remains robust, thanks to the prudent and flexible approach we have taken across our operations. Due to an increased focus on efficiency while meeting double-digit market growth and maintaining costs under control, Dangote Cement has and will consistently deliver superior profitability and returns to its shareholders,” he added.
Dangote Cement became the first Nigerian listed company to report its financial results using XBRL format with the IFRS taxonomy. Adopting XBRL reporting format will strongly benefit Dangote Cement’s existing and potential investors. It represents another step in continuing efforts to modernize and enhance transparency of, and access to, companies’ disclosures.
Dangote Cement has a long-term credit rating of AA+ by GCR and Aa2.ng by Moody’s due to its market leading position, significant operational scale and strong financial profile evidenced by the company’s robust operating and net profit margins relative to regional and global peers, adequate working capital, satisfactory cash flow and low leverage.
Dangote Cement is a subsidiary of Dangote Industries Limited, a diversified and fully integrated conglomerate as well as a leading brand across Africa in businesses such as cement, sugar, salt, beverages, and real estate, with new multi-billion-dollar projects underway in the oil and gas, petrochemical, fertiliser and agricultural sectors
