Dangote Cement Plc, a prominent player in the cement industry, has reported a profit of N178.6 billion ($234.8 million) in the first half of the year, with a net profit increase of 3.8%. In an exclusive interview with FORBES AFRICA, the Group Managing Director, Arvind Pathak, attributes this to several key factors.
Dangote Cement Plc, a prominent player in the cement industry, has reported a profit of N178.6 billion ($234.8 million) in the first half of the year, with a net profit increase of 3.8% propeled by a host of measures aimed at enhancing profitability.
Dangote Cement Plc operates as a subsidiary of Dangote Industries, a venture established by Aliko Dangote back in 1981, initially rooted in importing commodities like bagged cement, rice, sugar, flour, salt, and fish. The entity now stands as one of the foremost cement companies in sub-Saharan Africa, boasting an annual production capacity of 51.6 million tonnes across 10 nations.
In an exclusive interview with FORBES AFRICA, Dangote Cement Plc’s Group Managing Director, Arvind Pathak, attributes the performance in the first half of the year to several key factors.
“The growth in revenue was due to few reasons. Firstly, we delivered double digit volume growth in our pan-Africa business. Secondly, we realized some price increases in line with inflationary realities, especially in some of our pan-Africa operations. Thirdly, there was an improvement in our product and location mix, thereby optimizing our sales for better economic value.”
He notes maintaining profitability alongside sales surge required diligent attention to operational efficiencies and sustainability.
“Dangote Cement was able to maintain profitability and sales growth by focusing on operational efficiencies (cost optimization) and customer needs. We continue to build on our robust cost reduction strategy, amid the high operating cost environment. We achieved giant strides in transitioning to cleaner energy, with our cost containment initiative propelling the use of alternative fuel to replace more expensive fossil fuels, such as coal and gas.
“We also increased the use of Compressed Natural Gas (CNG) for our trucks due to the rising diesel cost environment. These efforts enabled us to enhance our competitiveness while maintaining high levels of quality and customer service,” says Pathak.
In a fiercely competitive market, Dangote Cement prioritizes customer-centric strategies.
“We support customers through various measures such as trainings on best practices in cement application, continued customer engagement and truck empowerment scheme, etc. In addition, the National Consumer Promotion ‘Bag of Goodies’ is another way we reward our loyal customers and increase customer awareness of our products.”
Dangote Cement’s pursuit of growth has led to forays into new markets and regions. The commencement of operations at the Takoradi grinding plant in Ghana expanded the company’s installed capacity to 52.0Mta. Additionally, the company explored export opportunities, sending Clinker from Congo to Cameroon, Zambia to Zimbabwe, and Nigeria to Ghana, contributing to the growth momentum.
Unveiling profit-boosting measures, Pathak narrates: “We streamlined our core focus into optimizing the efficiency of our existing assets, increasing output, and containing cost. Under our ‘Build Momentum’ program, we initiated various fuel and power efficiency improvement measures.”
According to Pathak, the company’s export strategy fortified by foreign currency revenue enabled effective handling of foreign obligations. Also, the diversification of geographic portfolios mitigated isolated risks, while Pan-Africa investments generated robust cash flows, achieving a record earnings before Interest, taxes, depreciation, and amortization (EBITDA) margin of 28%.