Federal Government’s expansion projects in various parts of the country and an increase in demand from private sector have increase cement sales by N330.26bn in one year.
An analysis of unaudited third-quarter financial reports of cement manufacturers listed on the Nigerian Exchange Limited revealed that the sales of cement across the country rose from N1.1tn in the first nine months of 2020 to N1.43tn in the corresponding period of 2021.
Lafarge Africa Plc’s cement sales rose by N39.32bn from N179.88bn recorded last September to N219.2bn in the third quarter of this year. BUA Cement Plc also reported a N30.36bn increase in its sales of cement during the period, from N156.55bn in Q3 2020 to N186.91bn in Q3 2021.
Dangote Cement Plc in its results on Friday revealed that its cement sales rose by N260.58bn to N1.02tn in Q3 2021 from N761.42bn in Q3 2020.
In their reports on BUA Cement, analysts from Cordros Capital stated, “Although management is yet to provide details behind the double-digit growth in revenue, we imagine that sustained private sector demand combined with the upward adjustment in cement prices, implemented at the start of the year, supported the top-line performance.”
For Lafarge Africa, the report said, “We believe the double-digit growth in cement sales was supported by private and public sector demand for cement as well as continued gains from the substantial increase in price per tonne of cement as of H1 21.
“We believe strong demand from individual home builders following the full reopening of the economy has continued to support private sector demand. On the other hand, we think the reduced focus on the health sector amid increased government finances must have generated positive spill-overs on public sector demand for cement.”
A research analyst at Atlas Portfolios Limited, Mr Olaide Baanu, said the expansion of the various projects of the Federal Government in different geopolitical zones, and other state governments led to the increase in sales of cement.
He added, “Looking at Dangote Cement, the majority of the sales are through the Dangote Refinery and other projects like road construction.
“Remember that in July, the Federal Executive Council approved N309.91bn to Dangote Industries for the construction of five roads, which will be advanced by the company in tax credits.”
Analysts at Cordros Capital however expressed concerns about the rise in cost of sales due to the effects of naira devaluation on essential materials for production such as gypsum and gas contracts, which are settled based on the official exchange rates.