Dangote Cement shares hit highest price in 17 months — after impressive Q3 result

The shares of Dangote Cement, Nigeria’s second most capitalised company, was the favourite for investors on the floor of the Nigerian Stock Exchange on Monday, driving the price to a 17- month high at N185.

The last time its shares traded at such a high price was on June 10, 2019, when it traded at N189.

The rally in the share price rode on the back of an impressive third quarter (Q3) 2020 result released last week.

Figures from the three months (July to September) result show that the group’s revenue grew by 34.2 percent at N284.59 billion in 2020 from N212.06 billion in the same period in 2019.

This was driven by the improvement in revenue from its Nigerian operations which was up 45.5 percent from N139.59 billion in 2019 to N203.12 billion, while pan African operations revenue rose by 19.79 percent at N87.58 billion from N73.11 billion in 2019.

The solid topline performance in the three months provided a tailwind for a faster expansion in the nine-month (January to September) revenue which was up 12 percent year-on-year from 2 percent year-on-year in the first six months of the year.

The management of Dangote Cement said it has doubled down on its export strategy with the export of 6 clinker vessels in the third quarter from Nigeria to Cameroon through the Apapa export terminal (2 vessels per month).

“Including maiden shipment in June, 7 clinker vessels have been exported to date, on track to commission the Port Harcourt export terminal before the end of the year, cement export by sea via Lekki export terminal being explored, land cement export restarted amidst gradual re-opening of borders,” the company said.

The largest cement by market share also saw its earnings receive a boost from moderation in net finance cost in the third quarter.

This was supported by the blend of higher interest income at 143 percent, a foreign exchange gain of N4.76 billion in the third quarter which was absent in the previous period in 2019, and the high base finance cost in the third quarter 2019 due to foreign exchange losses of N6.99 billion.

Administrative, selling and distribution expenses remain flat in the three months (July to September) at N13 billion and N41 billion respectively.

Despite a higher tax charge at N26.6 billion in Q3 2020 as against N7.1 billion in the same period in 2019, profit after tax ballooned by 135 percent at N82.54 billion from N35.11 billion in the same period in 2019.

It is also noteworthy that the company faced input cost pressures during Q3 2020, arising from dollar-linked cost items, as seen in the 32.24 percent spike in energy cost at N40.03 billion from N30.27 billion in 2019.