DANGCEM published its Q3-23 unaudited financials yesterday (26 October), reporting stellar growth of 141.3% y/y in Q3-23 standalone PAT as EPS surged by 137.8% y/y to NGN5.48, bringing 9M-23 EPS to NGN16.08 (+29.6% y/y). The Q3-23 EPS print was boosted by the impressive growth in the topline (+52.7% y/y) and foreign exchange gains (NGN14.61 billion) in the period. The group’s aggregate revenue grew by 52.7% y/y in Q3-23 (9M-23: +28.7% y/y), driven by broad-based expansion across the Nigerian (+17.5% y/y) and Pan African (+140.9% y/y) operations. For Nigerian operations, the revenue growth was driven mainly by higher price per tonne (+25.1% y/y) amid a decline in volumes (-5.6% y/y to 3.91MMT). Management disclosed that the decline in sales volumes was due to increased rainfall which slowed down demand from construction activities during the period amid the devaluation of the country’s currency. On Pan-African operations, sales growth in Q3-23 remained sturdy as volumes grew by 20.0% y/y (9M-23: +15.2% y/y) – accounting for 41.9% of the group’s volume in the nine months. Management highlighted that Pan-African operations growth was driven by healthy volume growth amid robust demand, particularly in Senegal, Congo and Ethiopia. Furthermore, the group is now producing at full capacity in Senegal and Ethiopia, while Cameroon is close to full capacity. Overall, the substantial Pan-African volumes boosted the group’s sales volume in Q3-23 by 4.2% y/y to 6.87MMT as group volumes for 9M-23 (-2.4% y/y to 20.29MMT) were neutered by the volume compression in Nigerian operation (9M-23: -10.9% y/y). Group EBITDA (Q3-23: +0.3ppts to 38.9%) and EBIT (Q3-23: +0.8ppts to 32.1%) margins increased slightly as the faster growth in cost of sales ex-depreciation (+62.0% y/y to NGN228.03 billion) and operating expenses ex-depreciation (+39.1% y/y to NGN121.45 billion) muted the trickle-down effect of sales growth (+52.7% y/y) recorded in the review period. Net finance cost declined by 49.2% y/y to NGN22.59 billion in Q3-23, as the higher finance income (+179.1% y/y to NGN19.07 billion in Q3-23) recorded in the quarter from FX gains (NGN14.61 billion) moderated the surge in finance cost (+112.6% y/y to NGN41.66 billion). Profit before tax grew by 132.4% y/y to NGN165.03 billion in Q3-23 aided by a NGN6.64 billion gain on net monetary positions (9M-23: NGN13.30 billion) from Ethiopia’s hyperinflationary environment. Consequently, PAT settled at NGN98.95 billion (vs Q3-22: NGN41.00 billion) after accounting for a higher tax charge of NGN66.08 billion (Q3-22: NGN30.01 billion).
