In spite of the covid1-9 pandemic and lockdown that came with it, Dangote Cement Plc group was able to grow revenue in the second quarter period; April to June 2020 by a marginal 0.04%, while profit after tax for the same period grew by 11.13%.
This was contained in the company’s interim financial statements for the three months and six months ended 30th June, 2020 released earlier today to the Nigerian Stock Exchange and the investing public.
A review of the H1 ended 30th June 2020, shows that despite the lockdown, the company recorded revenue of N476.852 billion, 1.95% higher than the N467.730 billion record in the same period in 2019.
DANGCEM produced 11,674 metric tonnes of cement in the first half of the year, and 5,631 metric tonnes for the second quarter. The company sold 12,114 metric tonnes in the first half of the year, and 5,816 metric tonnes in the second quarter.
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In the same periods in 2019, the company produced 11,967 metric tonnes in the first half of the year, and 5,997 metric tonnes in the second quarter. It sold 12,294 metric tonnes in the first half and 5,956 metric tonnes in the second quarter.
The income statement showed a profit after tax of N126.14 billion in H1 2020, a 5.79% increase from the N119.240 billion profit after tax recorded in H1 2019.
A review of the statement of financial position shows that as at 30 June, 2020, DANGCEM has total assets worth N1.806 trillion, funded by N1.065 trillion liabilities and N739.367 billion of Shareholders equity.
From the production and sales volume, one can deduce that covid-19 impact on the operations of the company has been negligible.
Commenting on significant events, the company had this to say in the report;
“From the beginning of the COVID-19 pandemic, we have proactively deployed recommended measures to protect the health and well-being of our employees, customers, suppliers and communities. As such, we have implemented several rigorous protocols in our operations across the continent. We are closely monitoring all markets according to the guidance provided by the Authorities in each country.
“In March 2020, the Nigerian government imposed restrictions on economic activities and movement of people in some of the States in the country in order to control the spread of the COVID 19 virus. The temporary restrictions were eased and is expected that the Government of Nigeria will continue to assess the risk associated with the COVID 19 pandemic and adapt responses accordingly.
“Our plants continued to operate during this period but we witnessed a reduction in sales volumes for the second quarter of 2020 compared to the same period for 2019. Any further lockdown or more stringent restrictions could result in reduced volumes in the future While it is normal trend to witness a reduction in sales during the rain season which usually starts in April, the COVID 19 restrictions contributed to further reduction during the second quarter of 2020 as compared to the same period for 2019.
“In our Pan Africa operations, the response by the authorities of these countries varied in nature from specific temporary restrictions in some countries to a complete temporary lockdown for businesses that are not considered as part of the essential services. This notably resulted in total shutdown of our plants in South Africa, Congo and Ghana for a period of time.
“The restrictions in most countries were revised during the second quarter with our plants restarting production. The restrictions resulted in reduced volumes for the countries that had temporary full lockdown. Authorities appear to be continuously assessing the spread of the virus and amending these temporary restrictions accordingly.
“We have considered the impact of the restrictions across the jurisdictions we operate in and concluded that the business will remain a Going Concern in the foreseeable future and the interim Financial Statements have been prepared on a Going Concern basis. The Directors have also concluded that no material adjustments are required on the assets and liabilities as a result of the COVID impact.”
Analysts at Investogist has a BUY rating on the shares of Dangote Cement Plc, with an upper fair price of N125.00. At the end of trading on Friday on the floor of the Nigerian Stock Exchange, the share price of DANGCEM was at N134.20, 5.49% down YTD, 45.22% down over 3 years, and 21.52% down over the past 5 years.