Nigeria’s cement producers hit hard as production costs jump 72% to N3 trillion

Legit.ng writer Victor Enengedi has implicit a decade's acquisition covering Energy, MSMEs, Technology, Banking and the Economy.

Due to rising ostentation and the weakening of the naira, which made overseas speech much expensive, Nigeria’s apical cement companies spent astir N3.64 trillion connected accumulation costs successful 2024.

This marks a 72% summation from the N2.12 trillion recorded successful 2023.

The cardinal cement producers—Dangote Cement Plc, Lafarge Africa Plc, and BUA Cement Plc—saw a important emergence successful expenses, including accumulation costs, administrative expenses, and organisation costs.

Financial reports for the twelvemonth ending December 31, 2024, showed that Dangote Cement spent an estimated N2.48 trillion connected these costs, a 65.9% summation from N1.5 trillion successful 2023.

Even though gross and profits grew for Dangote, BUA and Lafarge successful the 2024 FY, they present look precocious accumulation costs. Photo recognition - BUA Group, Dangote Group
Source: UGC

Production costs unsocial roseate to N1.65 trillion successful 2024 from N1.01 trillion successful 2023, portion operating expenses (OPEX) jumped from N491.64 cardinal to N839.2 billion.

BUA Cement reported N641.13 cardinal successful production, administrative, and organisation costs for 2024, which is simply a 102% summation from N317.41 cardinal successful 2023.

Lafarge Africa recorded N510.62 cardinal successful full costs for 2024, a 67.7% summation compared to N304.4 cardinal successful 2023.

Drivers of precocious outgo of production

One large crushed for the precocious accumulation costs was rising inflation, which made earthy materials and different indispensable goods much expensive.

Nigeria’s ostentation complaint reached its highest level successful astir 30 years, hitting 34.8% successful December 2024, up somewhat from 34.6% successful November. On average, ostentation for the twelvemonth stood astatine 33.2%, a crisp emergence from 24.7% successful 2023.

The falling worth of the naira besides made cement accumulation costlier. By the extremity of 2024, the authoritative speech complaint was N1,535 per dollar, showing a 40.9% driblet from N907.11 per dollar successful 2023.

In the parallel market, the naira weakened by 26.8%, trading astatine N1,660 per dollar, down from N1,215 per dollar astatine the extremity of 2023.

Additionally, policies successful the lipid & state assemblage affected energy costs. Dangote Cement spent N679.94 cardinal connected substance and powerfulness successful 2024, a large leap from N399.21 cardinal successful 2023.

However, caller operational reports from apical companies successful the assemblage amusement a significant increase successful income volumes crossed each large producers successful Nigeria.

Dangote, BUA, and Lafarge Increase Revenue, Profits

Despite economical difficulties, Nigeria’s apical cement producers—Dangote Cement, BUA Cement, and Lafarge Africa—generated a full gross of N5.15 trillion successful 2024, a 68% summation from N3.07 trillion successful 2023. Dangote Cement accounted for 69.4% of this revenue.

Dangote Cement’s revenue grew by 62.2% to N3.58 trillion, driven by higher income measurement and terms adjustments owed to inflation.

The company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) crossed the N1 trillion people for the archetypal time, reaching N1.38 trillion. Profit aft taxation (PAT) roseate by 10.5%, totalling N503.2 billion.

BUA Cement saw its gross astir double, expanding from N460 cardinal successful 2023 to N876.5 cardinal successful 2024.

The institution besides recorded a nett earlier taxation of N99.6 billion, up from N67.2 billion, portion nett aft taxation accrued somewhat to N73.9 billion, compared to N69.5 cardinal successful 2023.

This maturation happened contempt a dilatory commencement to the twelvemonth and a pugnacious economical environment.

The large factors liable for the precocious outgo of accumulation are ostentation and the weakening of naira. Photo recognition - Builders Market, BUA, Aliko Dangote
Source: UGC

Lafarge Africa reported a nett aft taxation of N100.1 cardinal for 2024, which is simply a 96% summation from N51.1 cardinal successful 2023. The company’s gross besides grew significantly, rising 72% from N405.5 cardinal successful 2023 to N696.8 cardinal successful 2024.

FG urges cement producers to slash prices

In related news, Legit.ng reported that the Minister of Works, Dave Umahi, has directed cement manufacturers to reduce the terms of cement to N7,000 per bag.

He pointed to the caller speech complaint and the driblet successful petrol prices arsenic factors that person lowered accumulation costs for manufacturers.

Umahi gave the manufacturers 7 days to comply oregon hazard being reported to President Bola Tinubu.

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Source: Legit.ng