Is Grey the New Gold?
Indeed, despite the global economic downturn and prohibitive costs of building materials, property ownership still appears to be a major priority for many Nigerians.
It is this rising demand, along with ongoing investor-backed construction projects like Eko Atlantic, Lekki Deep Sea Port, Facebook office and others, that the cement barons have richly capitalized on.
Statistics from the NBS indicate that the construction and real-estate sectors contributed N20 trillion to the country’s GDP in the first three quarters of 2022, with construction contributing over N12 trillion and real-estate accounting for the rest.
Furthermore, in the last quarter of 2022, construction contributed 9.5 percent to the nominal GDP, up from 9.26 percent and 7.95 percent in the previous years.
And with the Global Data Centre projecting an AAGR growth of more than 3 percent over the next three years, you can expect more investors to join the new gold rush.
Despite the stained and negative impacts of a harsh economy on businesses, the total revenue generated by the three giant cement Nigerian manufacturing companies for the nine months of this year rose by 20 percent to N1.71trn compared to N1.43trn in the corresponding period of 2021. The revenue figure, to put into perspective, is slightly higher than the N1.7trn 2022 budget estimates of the Lagos State Government. And the results of three more months of the year have not been factored into the sales figures.
Castles Lifestyle findings from the Q3 unaudited interim financial statements of the companies show that BUA Cement reported a rise in revenue by 40.5 percent year-on-year to N262.6bn relative to N186.9bn in the corresponding period of 2021. Its Profit Before Tax grew by 19 percent to N88.81bn from N74.33bn, despite the huge operating expenses.
Lafarge Africa increased its revenue and PBT figures by 23 percent for the nine months. The financial statements show that the company revenue grew to N269.85bn from N219.197bn in the corresponding period of 2021, while its PBT rose to N53.95bn compared to N43.90bn.
“Our Q3 2022 results underscore the company’s resilience, with 23.1 percent growth in Net Sales, 17.5 percent growth in EBIT and 11.2 percent growth in Net Income,” says Lafarge Africa’s Chief Executive Officer, Khaled El Dokani.
The big elephant in the room, Dangote Cement, saw its revenue rise by 13 percent to N1.177trn for the three quarters compared to N1.02trn in the same quarter in 2021. However, the company’s PBT slumped by 17 percent to N335.90bn in 2022 from N405.49bn in 2021, a negative reflection caused by administrative, selling and distribution expenses in the nine months periods.
