Dangote Cement Plc: Group Records 8% Y/Y Decline in Q3-18 PAT

October 22, 2018/Cordros report

DANGCEM just published 9M-2018 results with Group Q3-18 EBITDA growing by a marginal 0.7% y/y while net profit was lower by 8% y/y. Revenue grew by 6% y/y on 10% increase in sales volume.

  • For the three months ended September, gross margin was 130bps lower y/y (dragged by non-Nigerian operation), opex margin higher by 256bps y/y (due to Nigerian operation), while net finance cost increased by 10% y/y (coming also from non-Nigeria). 
  • For 9M-18, revenue and PAT grew by c.14% and c.3% vs. 9M-17. Annualized, both are tracking behind consensus’ 2018FY estimates by 2% and 13% respectively.

Breaking down Q3-18 result across the Group’s operations:

  • Nigerian operation recorded revenue (2% y/y), EBITDA (0.4%), and PAT (24% y/y) growth. Earnings was supported significantly by the growth in net finance income (302% y/y). The positives from Nigeria are (1) volume growth (6% y/y), higher gross margin (389bps y/y), and lower finance cost (-21% y/y), while the negative is the significant increase in both operating expenses and the margin (47% and 711bps y/y respectively). 
  • Non-Nigerian revenue (14% y/y) and EBITDA (c.3% y/y) grew while loss after tax increased (230% y/y). Earnings was negatively impacted by the significant increase in net finance cost (302% y/y). Also impacting the result is the decline in gross margin (751bps y/y). 

Comment: The current y/y decline in quarterly earnings marks the Group’s third in a row. We think this might impact trading in the stock today, more so with annualized profit trailing consensus’ at double-digit. Our estimates are under review.

Consolidated       Nigeria     Pan Africa      
Income Statement (N’bn)

30-Sep-18

y/y ∆

Q3-18

Q3 y/y

30-Sep-18

y/y ∆

Q3-18

Q3 y/y

30-Sep-18

y/y ∆

Q3-18

Q3 y/y

Revenue

685.29

13.5%

202.85

6.3%

471.33

13.3%

127.23

2.0%

213.96

14.1%

75.62

14.3%

Cost of sales

-287.68

10.7%

-90.09

9.5%

-129.26

6.1%

-34.10

-10.9%

-158.42

14.7%

-55.99

27.2%

Gross profit

397.61

15.7%

112.76

3.8%

342.07

16.2%

93.14

7.7%

55.54

12.5%

19.63

-11.4%

Operating expenses

-64.83

23.9%

-23.45

19.3%

-46.31

37.0%

-15.88

67.8%

-18.52

0.0%

-7.57

-25.8%

Other income

4.52

54.9%

1.98

16.2%

2.88

107.4%

0.84

5.5%

1.64

7.3%

1.14

25.5%

EBITDA

337.30

14.6%

91.29

0.7%

298.64

14.0%

78.09

0.4%

38.66

19.3%

13.20

2.7%

Dep & amort.

-70.44

15.2%

-24.95

18.9%

-37.23

13.0%

-13.86

28.1%

-33.21

17.6%

-11.09

9.0%

Operating profit

266.86

14.5%

66.34

-4.7%

261.41

14.2%

64.23

-4.1%

5.45

30.8%

2.11

-21.4%

Finance income

10.62

-60.6%

7.03

-32.8%

76.63

43.2%

36.60

128.8%

-66.01

148.6%

-29.56

435.7%

Finance costs

-30.12

-24.6%

-11.55

-25.5%

-16.65

-31.9%

-6.72

-21.4%

-13.47

-13.0%

-4.83

-30.6%

Profit before tax

247.36

12.3%

61.83

-4.3%

321.40

24.5%

94.10

26.5%

-74.04

95.5%

-32.28

229.6%

Income tax expense

-89.09

34.9%

-16.71

7.8%

-91.13

38.0%

-18.20

36.8%

2.04

-4096.1%

1.49

-167.5%

Profit for the period

158.28

2.7%

45.11

-8.1%

230.28

19.9%

75.91

24.3%

-72.00

89.9%

-30.79

156.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

Owners of Company

157.71

2.7%

45.18

-8.1%

230.28

19.9%

75.91

24.3%

-72.57

88.9%

-30.72

157.1%

Volume

17.77

7.6%

5.41

10.2%

10.76

11.7%

2.95

6.2%

7.01

1.9%

2.46

15.5%

opan



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