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Higher costs lead to lower 1H profits for Dangote Cement

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World Cement,

Dangote Cement has reported profit after tax of N95 billion for the first half of the year. This is an 11% decline from last year’s figures, which the company attributes to higher operating costs, including power. Revenues increased from N198.5 billion to N208.9 billion and gross profit rose from N132 billion to N133 billion, but selling and distribution expenses also rose, at N14 billion from 1H13’s N12.9 billion. Finance costs rose by 29% and tax cost the company N11.6 billion, rising from zero tax in 1H13.

“Disruption to our gas and low-pour fuel-oil supplies has weighed on both our sales and margins and hampered our ability to supply Nigeria’s healthy demand for cement,” Chief Executive Officer Devakumar Edwin said in an e-mailed statement quoted on Bloomberg. “Across Africa we continue to make progress in opening new plants to serve the continent’s growing need for cement and later this year we will open our plants in Zambia, Ethiopia, Cameroon and Sierra Leone.”

As reported last week, Dangote Cement is already tackling the high cost and unreliable supply of gas to its operations by investing in coal-fired power. The company has already placed an order to import 30 000 t of coal from South Africa.

By the end of this year, Dangote Cement will have the capacity to produce 29.2 million t of cement in Nigeria alone thanks to the expansions underway at existing plants. A report on BusinessDay Online suggests that Nigeria will be completely free of cement imports as early as 2017 based on current trends.

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