Despite increased income for manufacturers, the price of cement hovers above 4,000 naira per 50 kg
DDespite the launch of BUA’s 3 million metric ton cement plant in January and increased revenues for major cement manufacturers in the country, the price of cement per bag has continued to hover above 4,000 naira.
The product’s contribution to the Nigerian economy stood at 2.7 trillion naira in the first half of 2022, a report by the National Bureau of Statistics (NBS) revealed.
The H1 2022 figure performed better than H1 2021 which was valued at N2.4trn
The three cement manufacturing companies of the Nigerian Exchange Limited (NGX) reported revenue of N1.18 trillion, translating to total profit growth of N270.9 billion during the year. first semester (H1) ended June 30, 2022.
A breakdown of the Unaudited first half results showed that revenue increased 23.3% to N1.18 trillion from N959.84 billion in the six months ended June 30, 2021.
With a sales volume of around 14,206,000 tonnes in the first half of 2022 compared to 15,277,000 tonnes in the first half of 2021, Dangote Cement retained the lead in revenue generation, followed by BUA Cement and Lafarge Africa Plc.
Dangote Cement recorded revenue of N808.04 billion in the first half of 2022, an increase of 17% from N690.5 billion in the first half of 2021.
For its part, BUA Cement recorded a turnover of 188.56 billion naira in the first half of 2022, an increase of 51.7% compared to the 124.3 billion naira recorded in the first half of 2021.
In addition, Lafarge Africa reported revenue of N186.6 billion in the first half of 2022, compared to N146.02 billion recorded in the first half of 2021, an increase of 29%.
Analysts explained that a marginal increase in cement prices this year had a positive impact on revenues, which ultimately boosted profits.
They, however, argued that rising production costs due to inflationary pressure, among other factors, had reduced profits, resulting in lower profits reported by Dangote Cement.
Specifically, Dangote Cement recorded a 16.8% increase in cost of sales to 322.46 billion naira in the first half of 2022 from 276.12 billion naira in the first half of 2021, mainly due to the increase of 31 .3% of fuel and electricity consumption which closed the first half of 2022 at 129.96 naira. billion naira compared to 98.98 billion naira in the first half of 2021.
For BUA Cement, its production cost increased by 47.4% to N97.5 billion in the first half of 2022 from N66.16 billion in the first half of 2021.
Lafarge Africa announced a cost of production of sales of 90.52 billion naira in the first half of 2022, an increase of 25% compared to the 72.54 billion naira reported in the first half of 2021.
Due to increased production costs and financial expenses, Dangote Cement closed the first half of 2022 with a profit of N172.1 billion, down 10.2% from N191.63 billion. naira in the first half of 2021.
On the contrary, BUA Cement increased its profit by 41.4% to 61.36 billion naira in the first half of 2022 from 43.4 billion naira in the first half of 2021, while Lafarge Africa announced a profit of 37.4 billion. naira in the first half of 2022 compared to 28.32 billion naira in the first half of 2021.
Dangote Cement Managing Director, Michel Puchercos, explained in a statement that the significant increases in energy and automotive gas oil (diesel) are having a negative impact on the production and supply of cement products.
Despite these growths, Daily Trust reports indicate that prices remain above 4,000 naira at the retail level.
This rise has failed to allow Nigerians to reap the benefits of local production, as experts estimate that Nigerians pay 240% more than the global average for the product.
This has led Senate lawmakers to call for an easing of licensing restrictions to create the competition needed to drive prices down.
Lawmakers had warned that the high prices were having a negative impact on the Nigerian economy, which is struggling with double-digit inflation and a shrinking labor market.
They claimed that the increase has also slowed the number of construction works in the country as the industry grapples with the high cost of cement which has crippled economic activities.
In the same way, Central Bank of Nigeria (CBN) Governor Godwin Emefiele has charged manufacturers with the need to cope with rising prices of construction materials, including cement.
Emefiele, speaking at the commissioning of the BUA cement plant, said Nigerians lamented the skyrocketing prices of cement and manufacturers must first cater to the local market before exporting the product to markets. exteriors.