Cement producers are still smiling to the banks despite the harsh operating environment and decline in purchasing power of consumers.
Recent operational results of leading companies in the sector indicated that volume of sales has increased as well as sales revenue and profits.
Also investors have sustained bullish positions on the stocks just as investment analysts have given mouth-watering forecasts on 2024 year-end financial positions of the cement companies quoted on the equities board of the Nigerian Exchange Limited, NGX.
Financial Vanguard findings on the operating environment of the companies indicated that macroeconomic headwinds such as inflationary pressures, foreign exchange volatility, rising cost of production, and declines in purchasing power, have escalated since the beginning of this year.
But the cement producers have recorded superlative financial performance within the same period, indicating that a section of the consumers are still retaining strong purchasing power enabling them to spend beyond basic necessities of life such as food.
Domestic prices of cement have remained elevated with retail price ranging between N7,400 and N8,000 per 50 kg bag up from about N6,000 market average a year ago, reflecting the broader macroeconomic challenges.
But at the backdrop of the challenges demand for the product considered non-essential for the larger populace in Nigeria, has continued to rise.
Volume of products sold recorded significant increases across all the leading producers with the sector leader, Dangote Cement Plc, already growing volume by 3.8 percent in the six month period.
The combined outcome of the rising volume of sales and the product price increases during the period was a massive growth in net sales revenue for the major cement producers which rose by 76.6 percent in the first half of the year (H1’24).
The companies, which include Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc, recorded N2.419 trillion in sales revenue in H1’24 rising from N1.049 trillion recorded in the corresponding period of 2023.
Source: Vanguard
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