The growth in EPS according to the report was driven mainly
by the strong topline growth up by 24.2% year on year, which proved sufficient
in offsetting the spikes in cost of sales ex-depreciation up by 23.3% year on year while OPEX
ex-depreciation up by 39.4% year on year.
The report showed group’s aggregate revenue up by 24.2% year
on year to NGN413.18 billion in first quarter of 2022, driven mainly by expansion in Nigeria
operations up by34.3% year on year as
revenue from Pan African operations declined by 1.8% year on year faltered.
The revenue growth in Nigeria was primarily driven by the
increase in price per tonne by 36.4% year on year as volumes decline by 1.5%
year on year to 4.83MMT declined marginally. Management noted that the decline
in Nigerian sales volumes was due to the high base of first quarter 2021,
further exacerbated by energy supply disruptions which impacted production in
first quarter of 2022.
On Pan African Operations, we understand that the decline in
volumes decline by 7.6% year on year to 2.40MMT was occasioned by global supply
chain disruptions and increasing commodity prices, shut down of its Congo plant
for over two months and extended plant maintenance in Senegal. Overall, the
group’s sales volume declined by 3.6% year on year to 7.25MMT in first quarter
2022.
While Group EBITDA grew by 18.4% year on year in first
quarter 2022, as the growth in revenue
up by 24.2% year on year overshadowed the increases in the cost of sales
ex-depreciation up by 23.3% year on year and operating expenses
ex-depreciation growth by 39.4% year on
year.
However, the Group EBITDA margin declined by 2.5ppts to
51.0% in first quarter 2022. We attribute the weakness in margins to cost
pressures in Nigerian Operations, evident by the faster increase in cash
cost/tonne up by 49.9% year on year compared to the price per tonne up by 36.4%
year on year.
Management revealed that costs were pressured by the surge
in commodity prices (particularly gas), which led to a spike in energy
cost/tonne in Nigerian Operations grew by 46.7% year on year. In addition,
margins were impacted by the deterioration in OPEX/sales ratio of 17.2% in
first quarter 2022 compare with 15.3% in first quarter of 2021.
Other indicators are: Net finance cost grew by 22.0% year on
year to NGN26.41 billion in first quarter of 2022, following the surge in
finance income up by 183.4% year on year to NGN10.36 billion, which outweighed
the increase in finance cost grew by 45.3% year on year to NGN36.76 billion.
The finance cost growth reflects the impact of higher
interest expenses on debt grew by 27.6% year on year to NGN18.35 billion and FX
loss up by 71.6% year on year to NGN18.22 billion. On the other hand, we
imagine the growth in finance income was supported by increased deposit rates
and growth in cash and cash equivalents growth by 47.6% year on year to
NGN218.30 billion.
Overall, the company grew its PBT by 20.2% year on year in
the period under review. There were significant increase in tax charge which up
by 25.1% year on year in first of 2022 while PAT grew slower by 18.0% year on
year in the first quarter of 2022.
Analysts at Cordros Research said they are impressed that
DANGCEM was still able to deliver growth in revenue and bottom line in the face
of the challenges that constrained operations in its home market and across Pan
African Operations. According to them we expect margins to remain under
pressure in the near term, given supply chain disruptions, as well as elevated
gas and diesel costs.
However, we remain cautiously optimistic that the increase
in cement prices in its home market will continue to limit the magnitude of the
decline in margins, given rising cost pressures.
We would engage with management to gain insights on progress
made with the usage of alternative fuels and the extent to which one-off
challenges relating to the shutdown of the Congo plant and maintenance
activities have been addressed.
.jpeg)
.jpeg)
.jpeg)
0 comments:
Post a Comment