Dangote Cement PLC, the largest cement manufacturer in Africa has released its half year 2016 result showing a surge in its gross revenue to NGN292 billion.
However, as a sign of the rising cost of goods and services, Dangote’s Cement’s cost of sale for the first half of the year rose to NGN139 billion compared to NGN84 billion the company spent last year.
Net profit for the period fell to NGN103,42 billion compared to NGN121,808 billion the company made last year.
This points to the fact that the company’s revenue rose mainly because of inflation in prices, so did it cost of doing business which reduced its profit below the milestone of last year.
The company needs to watch its current ratio as its current liabilities (NGN355,52 billion) now exceeds its current assets- NGN273,65 billion. The risk of liquidity challenges might drive it to source for funding via term loans. Considering the high interest rate regime, bond and commercial papers might be the inevitable route to source funding.
In contrast, Lafarge Africa PLC, Dangote Cement’s arch-rival recorded a NGN30,2 billion loss for the second quarter of the year as a result of its ‘acquisition of 35% stake in Unicem’ and the devaluation of the Naira that exposed it Forex loan losses.
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