Nigeria has outstripped South Africa as sub-Saharan Africa’s largest cement producer, as industry capacity passed the 30 million metric tons mark and has the potential of reaching 58.5 million metric tons.
But cement companies have been suffering from an energy crisis as supply from gas plant has been intermittent thus culminating in spiralling production costs that slowed bottom line performance.
Also bleeding profit is huge tax liability suffered by some of the firms as tax holiday enjoyed on some of their plants have lapsed.
Cumulative net income of the four dominant cement makers - Dangote, Lafarge, Ashaka and Cement Company of Northern Nigeria - fell by 15.03 percent to N178.04bn from N209.96bn the preceding year.
Lafarge was the most hit at the bottom-line level as net income declined by 38 percent.
Dangote also witnessed a 10 percent decline in net income as shortages of gas and higher tax liability bled profit.
The best performers in the third quarter are CCNN and Ashaka Cement. Both firms are bedevilled by insecurity in the north part of the country where they operate.
Ashaka Cement, a subsidiary of Lafarge Africa, located in Gombe, recorded a 103.4 percent growth in net come while cost margins reduced drastically thanks to the company’s ability to substitute Low Pour Fuel Oil (LPFO) with coal in its fuel mix.
CCNA, a subsidiary of BUA Limited, also recorded impressive results in the review period as net income increased by 19.03 percent as it continues to keep costs to its barest minimum.
Rapid urbanisation combined with rising middle class that crave for accommodation are expected to spike the demand for cement which means Nigeria cement makers future is stellar.
Moreover, the 17 million housing deficits and the new housing refinancing scheme highlights the copious opportunities awaiting cement manufacturers in Africa largest economy.
Source: agregateresearch.com
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