Dangote Cement Plc has recorded a slim growth in earnings for the half year period ended June 30, 2014.
The results released on the floor of the Nigerian Stock Exchange (NSE) showed that its earnings went up marginally by 5.26 per cent to N208.91 billion from N198.46 billion in the prior year.
However, there was a higher increase in the cost of sales by 13.63 per cent to N75.37 billion from N66.33 billion in the first half of 2013, which leads to a flat growth in profit from core operation which stood at N111.98 billion compared with the N111.09 billion in the prior year.
Following the expiration of the tax holiday it enjoyed over the years, its net earnings dipped as pre-tax income reduced by 0.57 per cent to N107.07 billion in the period under review, from N107.68 billion in the corresponding period. This occurred despite a 9.16 per cent growth in finance income to N3.23 billion from N2.96 billion achieved in the corresponding period of 2013.
Analysts believed this was largely due to a significant spike in finance charges of 27.89 per cent to N8.15 billion from N6.40 billion, supported by the significant rise in short term borrowing and bank overdraft by 89 per cent and 169 per cent respectively during the period.
A further analysis of the results showed that the company’s shareholders’ funds declined by 4.17 per cent to N522.3 billion, reflecting the dip in net earnings.
Although its total assets grew by 6.74 per cent to N900.06 billion from N843.20 billion over the period, it was impacted by the significant rise in short term borrowings and bank overdrafts to N104.7 billion and N2.3 billion during the period.
Despite the company’s half year performance, analysts at BGL Limited stressed that they are optimistic about their full year revenue projection of N488.30 billion.
“As usual, the third quarter demand for construction is expected to lead to increase in sales by the company. In this regard, we retain out buy recommendation on the shares of Dangote Cement ahead of our detailed report on this result,” BGL stated.
Meanwhile, the Nigerian stock market performance indicator showed that the NSE -ASI depreciated by 0.05 per cent in yesterday’s trading to close at 41,767.33 (this brings the year-to-date appreciation to 1.06%) relative to the previous day trading session closing figure of 41,789.58.
Also, the turnover by volume of transaction decreased by 5.16 per cent relative to the previous day trading session closing figure. Value of transaction however, increased by 78.62 per cent. – Thisday.
