Three cement producers listed on the Nigerian Exchange Limited (NGX), Dangote Cement Plc, BUA Cement Plc and Lafarge Cement Plc made a combined profit of N156.55 billion in first quarter (Q1) of 2022, representing an increase of 29 per cent from N121.2 billion reported in first quarter of 2021.

Despite reporting hike in cost of sales and operating expenses, the growth in profit by Nigeria’s top cement makers was boosted by increase in revenue.

checks revealed that the retail cement prices in Nigeria reportedly rose from around N2,400-N2,600 per 50kg bag in 2020 to an average price of N4,000 at the end of March 31, 2022.

Meanwhile, Dangote Cement, Nigeria’s largest producer and the second most capitalised firm on the NGX, reported 18 per cent increase in its profit to N105.85 billion in Q1 2022 from N89.7 billion in Q1 2021.

The cement giant generated N413.18 billion revenue in Q1 2022, representing an increase of 24.2 per cent over the N332.65 billion recorded in Q1 2021.

However, Dangote Cement sales volumes in the Q1 2022 was hampered by disruptions to gas supplies domestically and by high freight rates restricting its exports of cement and clinker to Cameroon, Ghana and Sierra Leone. Its sales volumes of cement fell by 3.6 per cent year-on-year to 7.25 million metric tonnes in the Q1 2022 from 7.52 million metric tonnes in Q1  2021.

The chief executive officer of Dangote Cement, Michael Pucheros in a statement had said: “Our group volumes were down 3.6per cent mainly due to energy supply challenges in Nigeria. Our operations relying on cement and clinker imports – namely Ghana, Sierra-Leone, Cameroon – were impacted by the global supply chain challenges.”

Additionally, its operations outside of Nigeria was also negatively affected by a cement plant in Congo being shut for over two months due to maintenance and repairs and extended power plant maintenance in Senegal.

However, BUA Cement saw a 22.4 per cent increase in profit to N33.14billion in Q1 2022 from N22.4 billion in Q1 2021 as its revenue closed Q1 2022 at N96.99billion compared to N58.5 billion reported in Q1 2021.

While Dangote has continued to retain its spot as the largest cement manufacturer with plant capacity of 35.2 million metric tonnes, BUA has overtaken Lafarge to the second position, with a total plant capacity of 11mmt while Lafarge stays at 10.5mmt.

BUA inaugurated Kalambiana three million metric tonnes line three plants in 2021 and its plant capacity has been projected by FBNQuest to reach 20 million metric tonnes by 2024, when the company commissions an additional nine million metric tonnes.

In addition, Lafarge Africa reported 92.18 per cent increase in profit to N17.6 billion in Q1 2022 from N9.14 billion in Q1 2021, while its revenue rose by 27 per cent to N90.61 billion in Q1 2022 from N71.47 billion reported in Q1 2021.

Commenting, Capital market analyst and a stockbroker, Mr. Rotimi Fakeyejo said: “The strong growth across the listed cement manufacturing companies as a result of price increment in product. The cement manufacturing companies have been compelled to increase price to preserve margins from the impact of foreign exchange devaluation.”

He explained further that|: “For 2022, we are likely to see increased sensitivity from the private sector and also taking into account that this is a pre-election year. In pre-election years, you tend to see more cautious activities in the real estate sector because of uncertainties in the world economy.

“For public sector demand as well, we don’t expect any significant effect in that space as we see preparation for the coming elections distracting policymakers from implementing the capital expenditure in the budget for 2022.”

Similarly, a report by FBNQuest analysts stated that pre-election capital expenditure will help cement makers stay resilient in 2022.

The report predicts that subnational governments have the incentive to complete road and other infrastructure projects which will drive demand for cement.