Dangote Cement reports N455.6 billion profit despite incurring N164 billion in FX Losses.

Dangote Cement Plc reported a profit after tax of N455.58 billion for the financial year ended December 2023, representing a 19.7% increase year-on-year. 

The year-on-year growth in profits, despite growth in interest expenses and foreign exchange losses, was largely due to substantial revenue. 

Key highlights 

  • Revenue: N2.208 trillion from N1.618 trillion in 2022, +36.44% YoY 
  • Gross profit: N1.202 trillion from N955.433 billion in 2022, +25.79% YoY 
  • Operating profit: N734.267 billion from N585.876 billion in 2022, +25.33% YoY  
  • Profit after tax: N455.583 billion from N382.311 billion in 2022, +19.17% YoY. 
  • EPS: N26.47k per 50k share from N22.27k in 2022, +18.86% YoY  
  • Dividend: Announced N30 per share versus N20 per share (N
  • Outstanding Shares: 16.7 billion shares 

The group’s impressive performance continues to be driven by its Nigerian operations as reflected in the notes to the statements. The segment still accounts for about 59% of the group revenue. 

The company announced an N30 per share dividend based on its impressive performance compared to the N20 per share paid last year. Dangote Cement has consistently been paying dividends for the past five years. 

The share price has seen an impressive rally this year, gaining 115% YtD 

BUA Cement 2023 profit declines 31% to N69.45 billon due to FX losses

BUA Cement Plc reported a profit after tax of N69.45 billion for the financial year ended December 2023, representing a 31.2% decline year-on-year.

The year-on-year reduction in profits was largely due to a foreign exchange loss of N69.95 billion—an increase from N5.50 billion recorded in 2022.

Like most manufacturing companies in Nigeria, BUA Cement experienced profit declines as a result of the impact of the naira’s depreciation following the reunification of the exchange rate announced mid-last year.

Key highlights

  • Revenue N459.99 billion from N360.98 billion in 2022, +27.75% YoY
  • Gross profit N183.95 billion from N162.60 billion in 2022, +13% YoY
  • Operating profit N74.69 billion from N129.71 billion in 2022 
  • Profit after tax N69.45 billion from N101.01 billion in 2022, –31.2% YoY
  • EPS N2.05k per 50k share from N2.98k in 2022 
  • Dividend Announced N2 per share versus N2.8 per share
  • Outstanding Shares 33.8 billion shares

According to BUA, the foreign exchange loss capitalized relates to “the portion of the exchange losses arising from foreign currency borrowings eligible to be capitalized as part of the borrowing costs for capital projects” under construction.

  • BUA Cement’s foreign loan is estimated at $291.1 million and is a 9-year term loan granted by IFC and other lenders (African Finance Corporation, African Development Bank, and Deutsch Investitions-) on 27 April 2023.
  • There is a moratorium on principal repayments until 2025 and interest is payable semi-annually at a variable interest rate of 6-months term SOFR+5.5%. The facility will mature in December 2032.

Despite the profit drop, BUA Cement’s share price closed flat at N150 per share.

Equity investors lose N700 billion, a day after MPC interest rate hike

Nigeria’s stock market, the Nigerian Exchange Group (NGX), experienced a significant sell-off on Wednesday, with investors witnessing a 1.27% decline in the benchmark All-Share Index.

This downturn followed a 1.39% loss recorded on Tuesday, intensifying the bearish trend that began on Monday.

The sell-offs were exacerbated by the announcement from the monetary policy committee of the Central Bank, which raised the monetary policy rate to a record high of 22.7%, up from 18.75%.

This decision affected market sentiments profoundly, leading to widespread losses across the board.

Except for the oil and gas index, all other major indexes recorded losses, reflecting the broad impact of the hawkish policy rates on market dynamics.

Investors, speaking to Nairametrics, highlighted that the increased policy rates present significant challenges for equity markets, contributing directly to the observed sell-offs.

The NGX All-Share Index dipped below the 100,000 points mark for the first time in over a month, ending the day at 99,302.57.

  • Consequently, the stock market’s capitalization also dropped to N54.3 trillion, marking a substantial loss of N700 billion for investors. In the first three days of trading alone, stocks have lost N1.5 trillion in market value, underscoring the severity of the market downturn.
  • The banking sector, particularly the FUGAZ banks — consisting of First Bank of Nigeria Holdings (FBNH), United Bank for Africa (UBA), Guaranty Trust Holding Company (GTCO), Access Bank, and Zenith Bank — were among the major losers.
  • Fast Moving Consumer Goods (FMCG) stocks, including Nigerian Breweries (NB), Dangote Sugar, and Honeywell, also experienced notable declines.
  • Notably, Nestle Nigeria Plc, which reported a N104 billion loss earlier in the day, closed flat, indicating that investors had already factored in these results.

Impact of MPR

The decision by the Central Bank’s monetary policy committee to increase the benchmark Monetary Policy Rate (MPR) significantly impacts the financial markets.

  • Such measures are typically aimed at controlling inflation but can have the unintended consequence of dampening investor sentiment towards equities, as higher interest rates tend to favor fixed-income investments over stocks.
  • This shift in investment preference often leads to sell-offs in the stock market, as observed in the NGX’s recent performance.
  • Meanwhile, interest in fixed-income assets will likely rise as investors seek the safety of their investments.

This recent market activity also highlights the delicate balance central banks must maintain between controlling inflation and supporting economic growth.

As investors adjust their strategies in response to these policy changes, the impact on different sectors of the economy will continue to unfold, offering valuable insights into the interplay between monetary policy and financial market dynamics.

Meanwhile, despite the bearish trends, Nigeria’s stock market still trades at a price-to-earnings ratio of 14.49x compared to Frontier Markets’ 11.45x. South Africa, Ghana, and Egypt all trade at 15.76x, 3.67x, and 14.28x respectively.

Official exchange rate closes at N1609.51/$1 against dollar after CBN’s policy rate hike

The official exchange rate between the naira and the US dollar on Wednesday, February 28th, 2024, appreciated slightly by 0.4% to N1609.51 per US dollar as against the N1615 to a dollar recorded the previous day, according to data published on the FMDQ where forex is officially sold. 

Simultaneously, the dollar also experienced a 1.24% gain at the parallel market.  

Market analysts attribute the movement to potential reactions following a recent media briefing by the CBN Governor, Olayemi Cardoso, regarding the CBN’s efforts aimed at stabilizing the Naira and curbing inflation. 

Recent measures  

During the briefing, it was disclosed that the Monetary Policy Committee had increased the monetary policy rate to 22.75% from 18.75%. This adjustment was made with the intention of decelerating the pace of inflation. 

Furthermore, Cardoso emphasized that the MPC extensively discussed various distortions within the foreign exchange market, including the activities of speculators, which were exerting upward pressure on the exchange rate and contributing to inflationary pressures. 

Cardoso expressed confidence that the ongoing reforms within the foreign exchange market would produce the desired outcomes in the short to medium term.  

  • “These reforms encompass initiatives such as the unification of the foreign exchange market, the promotion of a willing buyer-willing seller market, the elimination of limits on margins for International Money Transfer Operator (IMTO) remittances, the implementation of a two-way quote system, and comprehensive reforms within the Bureau De Change (BDC) segment aimed at restoring stability, enhancing transparency, boosting supply, and fostering price discovery within the Nigeria Autonomous Foreign Exchange Market (NAFEM),” he said. 

Foreign exchange rates in various markets 

Data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), the official platform for foreign exchange trading, revealed a marginal appreciation of the domestic currency by 0.4%, with the Naira concluding the day at N1,609.51 per dollar.   

  • This represents an N6.4 gain or a 0.4% increase in the local currency compared to the N1,615 closed on Tuesday.   
  • The intraday high recorded a record high of N1660/$1, while the intraday low was N1401/$1, representing a spread of N259/$1.   
  • According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $119.14 million, representing a 22.72% increase compared to the previous day.   
  • Similarly, the Naira appreciated against dollar in the parallel forex market, where forex is unofficially traded, with the exchange rate quoted at N1,610/$1, reflecting a 1.24% increase from the N1,630 rate it closed at the previous day.    

The Great British Pound (GBP) stood at £1/N1960, an increase from £1/N2,000 recorded the previous day, this marks an increase of 2.56% compared to the rate recorded the previous day.  

  • However, the Naira depreciated against the Euro by 2.30%, closing at N1740/EUR1 compared to N1700/EUR1 reported the previous day.  

What you should know 

Nairametrics reported that Binance, a widely used crypt exchange with over 170 million users worldwide disabled its peer-to-peer feature for Nigerian users. 

Known as the P2P market, the network lets users, buyers, and sellers transact without the intervention of a third party. It gained popularity among Nigerians in 2021 after former president Buhari’s administration outlawed the country’s vibrant Crypto industry. 

Following the swift depreciation of the naira, which contributed to inflation reaching an almost three-decade high of 29.9%, the FG shifted its attention to websites that offered cryptocurrency services. These websites have become a viable option for engaging in trade and setting an informal value for the naira. 

Concerns were expressed by the Central Bank of Nigeria regarding the $26 billion that came through Binance Nigeria from “unidentified sources” in the previous year. 

  • “In the case of Binance, $26 billion has passed through Binance Nigeria in the last year alone from sources and users who we cannot adequately identify,” stated CBN Chief Olayemi Cardoso. “. 

Investors lose N1.5trn in stocks over new monetary policy

Investors in the Nigerian stock market lost about N1.5 trillion of their investment in the stock market following the massive adjustments in the Central Bank of Nigeria, CBN’s Monetary Policy Rate, MPR, at the Monetary Policy Committee, MPC, meeting yesterday.

Recall that the meeting raised the MPR by unprecedented 400 basis points to an equally unprecedented MPR height of 22.75 percent from 18.75 percent.

The NGX market capitalisation, which represents the total value of investment on the Nigerian Exchange Limited, NGX, dropped to N54.317 trillion at the close of trading on Wednesday from N55.810 trillion recorded on Monday.

On Tuesday, when the Governor of the CBN, Yemi Cardoso, announced the new MPR, the stock market went down with investors’ losing N773 billion and on Wednesday it dropped further by N720 billion.

In the same vein, another major stock market gauge, NGX All Share Index, ASI, declined for the two consecutive days by 2.7 percent to close at 99,266.02 points from 101,995.53 points it closed on Monday.

Trading analysis showed that the NGX ASI declined on Tuesday and Wednesday by 1.4 % and 1.3% respectively.

Market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 4.8 percent. A total of 396.23million shares valued at N5.83billion were exchanged in 10,549 deals.

Analysts attributed the bearish trend to selloffs in highly priced stocks and profit taking in blue chip companies that weighed on the benchmark NGX All Share index which closed lower, as the market reacted immediately to the 4% increase in MPR.

Reacting to this development,  analysts at Investdata stated: “This position did not come as a surprise to many, however, since Olayemi Cardoso, the new CBN Governor, had signaled this since November 2023, coupled with the failure to hold a policy meeting for so long a time, with inflation rate climbing to almost 28-year high at 29.9%. It is also the highest since Nigeria returned to democracy in May 1999, while the Naira depreciation is hitting almost 70% against dollar in the New Year 2024.”