Cement producers continue to enjoy strong financial performance despite challenging operating conditions and a decline in consumer purchasing power. Recent operational results from leading companies in the sector reveal growth in sales volume, revenue, and profits....For More READ THE FULL STORY▶▶
Investors have maintained bullish positions on these stocks, while investment analysts have issued promising forecasts for the 2024 year-end financial results of cement companies listed on the Nigerian Exchange Limited (NGX).
Companies’ operating environments have faced significant macroeconomic challenges this year, including inflationary pressures, foreign exchange volatility, rising production costs, and declining purchasing power.
Despite these obstacles, cement producers have achieved outstanding financial performance, suggesting that a segment of consumers still has sufficient purchasing power to spend beyond basic necessities like food.
Even with these challenges, demand for cement, which much of the Nigerian population considers non-essential, has continued to grow.
Domestic cement prices have remained high, ranging between N7,400 and N8,000 per 50 kg bag, up from an average of about N6,000 a year ago, reflecting the broader macroeconomic situation.
Sales volumes have significantly increased across all major producers, including Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc.
Rising sales volumes and higher product prices combined to result in substantial growth in net sales revenue for the major cement producers.
In the first half of 2024, they recorded sales revenue of N2.419 trillion, up from N1.049 trillion in the same period of 2023.
Changes in cement net sales
Dangote Cement recorded the highest net sales at N1.76 trillion, marking an 85.1% increase from N950.83 billion in the first half of 2023.
BUA Cement followed with total sales of N363.94 billion, a 64.6% rise from N221.07 billion during the same period in 2023.
Lafarge Africa Plc also saw its sales revenue increase by 45%, reaching N295.58 billion compared to N197.68 billion in 2023.
All three leading producers—Dangote Cement, BUA Cement, and Lafarge Africa—remain optimistic about delivering strong volume growth.
Investors’ interest
Investors are showing optimism toward company stocks, driven by expectations of increased capacity, strong sales volumes, and favourable pricing, which are anticipated to enhance earnings.
The industry’s average return is projected at 51% for the second half of the year.
A closer look at the return on investment (RoI) reveals that Dangote Cement achieved a 105.3% gain, as its share price rose from N319.90 at the start of the year to N656.70 per share by the end of trading on Friday, September 27, 2024.
Meanwhile, BUA Cement Plc posted a 40.4% return, and Lafarge Africa recorded an 8.1% return.
High demand for construction, infrastructure development
Speaking on the growth in sales of cement in Nigeria despite the skyrocketing prices, Uju Nwankwo, head of research at Folix Investment, said that it is a reflection of the high demand for infrastructure development.
She said:
“Despite the significant rise in cement prices, it’s impressive to see the steady growth in cement sales in Nigeria. This suggests that the demand for construction and infrastructure development remains high, driven by both private and public sector projects. The resilience of the market, even with financial challenges, highlights the critical role of cement in Nigeria’s ongoing urbanization and development. She added that it also reflects the determination of individuals and businesses to continue building, regardless of increased costs, prioritising development over short-term economic pressures..…For More READ THE FULL STORY ▶▶
