Cement producers in Nigeria continue to enjoy financial success, even amidst a challenging operating environment and declining consumer purchasing power. Recent operational results from leading companies in the sector reveal an increase in sales volume, sales revenue, and profits.
Investment analysts report sustained bullish positions on cement stocks, along with optimistic forecasts for the 2024 year-end financial performances of companies listed on the Nigerian Exchange Limited (NGX). Financial Vanguard’s findings indicate that macroeconomic issues, including inflation, foreign exchange volatility, rising production costs, and reduced purchasing power, have intensified since the beginning of the year.
Despite these challenges, cement producers have demonstrated remarkable financial performance, suggesting that some consumers maintain enough purchasing power to spend beyond essential needs like food. Domestic cement prices remain high, with retail prices ranging between N7,400 and N8,000 per 50 kg bag, up from an average of N6,000 a year ago, reflecting broader macroeconomic pressures.
Interestingly, demand for cement—a product often deemed non-essential by many—continues to grow. Leading producers, including Dangote Cement Plc, have reported significant increases in sales volume, with Dangote’s volume growing by 3.8% in the first half of 2024 (H1’24).
The combination of rising sales volume and product price increases resulted in a substantial 76.6% growth in net sales revenue for major cement companies, reaching N2.419 trillion in H1’24, compared to N1.049 trillion during the same period in 2023.
Analysts attribute this growth to both volume increases and higher revenue per tonne, forecasting impressive results for the full year. Analysts at CardinalStone Finance, a Lagos-based investment firm, project a 14.6% Year-on-Year (YoY) rebound in combined volumes for the three major players, targeting 32.8 million metric tons (MMT) with capacity utilization expected to reach 52.2%, up from 50.4% in 2023.
Despite a 3.5% YoY decline in cement output volume to 28.6 MMT in 2023—blamed on cash crunches from the poorly implemented Naira redesign policy and the electoral cycle—industry experts remain optimistic about the sector’s growth trajectory.