Three Dangote companies quoted on the floor of the Nigerian Exchange Group (NGX) raked in combined revenue of N1.51 trillion in the first nine months of 2022 (N2.01 trillion annualized).
This is contained in the unaudited Q3 2022 results, released by the companies on the Nigerian Exchange. The companies under consideration are Dangote Cement, Dangote Sugar, and Nascon Allied Industries.
The combined revenue posted by the Dangote companies compares to the N1.2 trillion reported in the same period last year. However, higher operating cost reduced their combined profits from N296 billion to about N240.8 billion in the period under review.
Growing numbers despite headwinds: Despite inflationary pressure, where businesses and their consumers have had to deal with the rising cost of goods and services, the companies have grown on the back of aggressive expansion.
However, like other manufacturing firms, they have had their production hurt by erratic fuel supply thus culminating in rising production costs. Additionally, they have also suffered from the epileptic power supply, which crimps the growth of manufacturers. This has remained one of the major challenges of manufacturers in Africa’s largest economy, Nigeria.
The effect of the falling exchange rate on the companies can not be overemphasized considering their exposure to the importation of raw materials, which relies on forex.
According to data tracked by Nairametrics, the revenue of the companies grew by 27.54% year on year to N1.51 trillion in the nine months that ended September 2022 from N1.24 trillion in the corresponding period of 2021.
However, the rising cost of sales swallowed much of the earnings following rising inflation and depreciating exchange rates. The aggregate cost of sales for the firms stood at N739.86 billion for the nine months period as against N577.1 billion in the previous year, accounting for over 49% of the generated revenue.
Breakdown of the analysis: A cursory look at the financials showed that Dangote Cement Plc maintained the lead in revenue generation, followed by Dangote Sugar Plc and Nascon Allied Industries Plc.
Dangote Cement reported revenue of N1.18 trillion in nine months ended September 2022 or (N1.57 trillion annualised). Compared to the corresponding period of 2021, revenue increased by 15.2% from N1.02 trillion recorded in nine-month 2021.
On its operations, the company is ramping up production at the Okpella plant and is deploying grinding plants in Ghana and Cote d’Ivoire, expanding its Pan-African reach.
For the third quarter of 2022, the management of Dangote Cement recorded an increase in the overall volume of cement sales by 6.2% to 20.8 metric tons in Q3 2022.
According to the company, this was achieved, despite the elevated inflation caused by a very volatile global environment.
To further increase the supply of cement across its operational base, the company also commissioned its power plant at Okpella and progressing well to deploy grinding plants in Ghana and Cote d’Ivoire.
Chief Executive Officer of Dangote Cement, Michel Puchercos, who disclosed this while presenting the Q3 2022 result further explained that “to mitigate the impact of the significant increase in energy and AGO costs, we are strengthening our efforts to ramp up the usage of alternative fuels.
”So far this year, we have co-processed 101,553 tonnes of waste, representing a 77% increase in 2021. We are on track to commission our alternative fuel feed system at Obajana lines I and V, and Ibese line II in November.
”In addition, we are ramping up our investment in compressed natural gas, CNG, to reduce our AGO usage.”
Dangote Sugar recorded revenue of N288.32 billion in nine months ended September 2022, a 47.5% increase compared to N195.5 billion recorded in the same period last year. Similarly, net profit grew by 60.1% to N24.83 billion in the same period.
Group Managing Director, Dangote Sugar Refinery Plc, Mr. Ravindra Singhvi speaking on third quarter 2022 results said that Dangote Sugar Refinery, Nigeria’s largest producer of household and commercial sugar with 1.44M MT refining capacity had continued to implement its sugar backward integration project plans, and enhance its out-growers scheme to support the economic growth of the immediate communities.
He said the company’s aim was to develop a robust out-grower scheme with no fewer than 5,000 outgrows when the projects have fully taken off.
This, he explained, was in addition to the achievement of other targets of its ‘Sugar for Nigeria Project’ plan.
“The key focus of the sugar refinery is the achievement of the Dangote Sugar Backward Integration Projects targets and putting Nigeria on the path of sugar self-sufficiency and the world sugar map.
“Employees’ health and safety as well as that of its partners remain a top priority at the company’s operations at the Apapa Refinery, its Sugar Backward Integration Operations in Numan, Adamawa, and Tunga, Nasarawa.
“All processes are in compliance with stipulated health and safety protocols,” he said.
Also, Nascon Allied Industries Plc posted revenue of N40.61 billion in nine months ended September 2022, representing a 62.8% increase from N24.9 billion recorded in the corresponding period of 2021.
The increase was driven by the price increases instituted across Nascon’s salt products. Across its business regions, revenue from the North (71.2% of revenue) remained the largest contributor to the total sales outturn, growing by 196.0% y/y; while revenue from the Western (+14.6% y/y | 22.1% of revenue) and Eastern (+54.2% y/y | 6.7% of revenue) regions maintained the momentum witnessed so far in 2022.
According to analysts at Cordros Capital “Nascon’s Q3-22 result highlights the company’s resilience since the turn of the year despite the weak operating environment and intense competition from Royal Salt in the retail segment. The food producer maintained margins at still high levels despite the strong headwinds in the year. Considering the resilience witnessed so far in 2022, we expect the company to see out the year positively, maintaining robust expansions in its top and bottom lines.”
