The biggest player on the Nigerian Stock Exchange (NSE) led the gainers table on New Year’s Eve, but lost grounds on an annual basis. Even if the cement maker is churning out good profit, it still needs overall good market performance to make gains.
The All Share Index has been on steady decline since January, falling about40 per cent, dragging down most stock with it. The Dangote Cement stock however, is on a year change of a negative 19.65 per cent, better than the negative 25.2 per cent roughly a month ago.
By hitting N184 at the close of trading a day before New Year, the Dangote Cement stock had outperformed the All Share Index (ASI) but by whiskers.
In the last six months, the stock had returned a negative 14 per cent while the ASI returned a negative 16 per cent. But this was a reversal in the stock’s fortune as it had underperformed the ASI on December 8, when it returned a negative 22 per cent while the (ASI returned a negative 21 per cent.
This is as the stock had beta of 1.1474, signifying a very high volatility relative to the market but beta has fallen to 1.1463 as at Monday 31.
Meanwhile, in the last nine months, the company’s revenue was up 13.5 per cent to N685.3 billion from N603.6 billion, but with a 10.7 per cent rise in the Cost of Sales (COGS) to N287.68 billion from N343.7 billion, Gross profit expanded a surprising 15.7 per cent to N397.6 billion from N343.7 billion, lifting gross profit margin by only a percentage point to 58 per cent from 57 per cent.
The slim margin could suggest that the cement maker have issues with its pricing strategy. But that may not be so given the clip on purchasing power by rising inflation and weak growth. While inflation is currently at 11.26 per cent and growth was stifled at 1.5 per cent.
The cement maker improved operating profit by 15.5 per cent to N266.86 billion from N233.14 billion after taming administrative, selling and distribution expenses in the period, leading yet another slim improvement in operating margin to 39 per cent from 38.6 per cent.
This indicates that the company named after its billionaire founder is struggling to make the best per naira of costs.
After providing for tax, the company’s pre-tax profits were up 12.4 per cent to N247.4 billion […]
