Nigeria's cement giants see mixed Q1'23 earnings

Nigeria's cement giants have reported a mixed bag of first quarter earnings, with some challenges and positive outlooks shaping the industry. The sector's recovery and bottom line have been impacted by various factors, including lower revenue quarter on quarter and higher tax expenses affecting net income. Abigail Alabi, industrial goods analyst for Sub-Saharan Africa at Vettiva, shed light on the numbers and discussed the sector's future prospects. The Nigerian operations of major players like Dangote Cement and Lafarge recorded a decline in volumes in Q1, attributed to cash shortages and the slowdown in public and private projects due to the elections. However, strong performances in other African countries helped offset the decline in revenues. Despite the challenges, there are expectations for a rebound in the sector with the easing of cash shortages and the anticipated resumption of capital projects in the second half of the year. Downstream Cement has also made efforts to address energy input issues by transitioning to compressed natural gas to control costs and optimize production. Cost efficiency remains a key focus for cement companies to maintain profitability margins amidst fluctuating FX rates and rising expenses. Looking at the overall industrial index which is up over 11% year-to-date, investors are eyeing companies with strong fundamentals and growth potential.