Dangote Cement reports Q3’18 EPS growth of 1.6% YoY to N2.64

Africa’s largest cement company Dangote Cement Plc has released its Q3 2018 result with an Earnings Per Share (EPS) growth of 1.6% Year on Year (YoY) to N2.64.

According to breakdown by investment house, ARM Securities, Dangote Group’s revenue grew by 6.3% YoY to N202.9 billion driven by higher volumes in Nigeria and the Pan-African businesses, despite relatively softer prices across markets.

The report stated that the Nigerian business recorded price erosion of 3.9% YoY to N43,187 per tonne, sales volume grew 6.2% YoY to 2.5 metric tonnes, removing the moderation in price to record revenue growth 2.01% YoY to N127.2 billion. While for the rest of Africa, volumes grew by 15.9% YoY to 2.5metric tonnes reducing the effect of a 1.4% decline in average prices to N30,728/tonne driving the revenue higher by 14.3% YoY to N75.6 billion.

However, input cost grew at a much faster pace (+9.46% YoY to N90.1 billion) boosted by higher salaries and depreciation expense. Salaries and related staff costs rose by 39.4% YoY to N8.7 billion while depreciation expense rose by 13.8% YoY to N16.2 billion moderating the impact of declines in energy cost per tonne (8.9% YoY N4,860) and materials consumed per tonne (7.1% YoY to N5,674). Consequently, gross margin contracted by 1.3% YoY to 55.6%.

Elsewhere, operating expense grew by 19.1% YoY to N48.4 billion, driven by higher haulage and depreciation expenses. Particularly, haulage cost/tonne in Nigeria rose 44.4% YoY to N4,541. As a result, OPEX to sales grew to 23.9% (+2.6% YoY). The depressed margins coupled with higher operating expense drove operating income lower by 4.7% YoY to N66.3 billion with respective margin at 32.7% (-3.8% YoY).

Further down, net finance cost moderated by 10.4% YoY to N4.5 billion hinged on a decline in both its finance income and cost. For clarity, finance income declined by 32.9% YoY to N7 billion, while the finance expense declined by 25.6% YoY to N11.6 billion.

A feed through of the pressure from its input and operating cost drove PBT lower by 4.3% to N61.8 billion. However, the lower tax reported in the period (-17.2% YoY to N16.7 billion) after restating its Q3 17 tax, drove PAT higher by 1.59% to N45.1 billion. For context, effective tax rate dropped to 27.0% (vs 31.2%)