Leading cement manufacturing company, Dangote Cement Plc last week announced its financial results for the half year ended June 30, 2014 and reported profit after tax (PAT) of N95 billion. The company reported increased revenue from N198.5 billion to N208.9billion, while PAT declined by 11 per cent due to high tax payments and other high cost of operations.
An analysis of the results showed that Dangote Cement expended N75 billion on cost of sale, up 14 per cent from N66 billion. Gross profit rose from N132billion to N133 billion.
However, selling and distribution expenses rose by 17 per cent from N12.9 billion to N14 billion. Finance cost rose by 29 per cent from N6.3 billion to N8.1bilion, while tax stood at N11.6 billion, compared to zero tax in the corresponding period of 2013. Consequently, profit after tax fell by 11 per cent from N107 billion to N95 billion.
Market analysts said Dangote Cement’s tax holiday on some of its plants as a result of pioneer status has expired, hence the huge tax liabilities paid in the first half of 2014. [eap_ad_2] Although the huge tax is seen as a new challenge for the company, Group Managing Director of Dangote Cement, Mr. Devakumar Edwin told shareholders last May that the company would intensify its direct-delivery strategy, which he said, boosted the company’s sales in 2013.
The company had ended 2013 with N201 billion profit, which Edwin attributed to focused and strategic management.
“Our direct-delivery strategy is proving very popular with customers and I am pleased to report that direct-to-customer deliveries now account for more than half of our sales. We increased our margins despite continuing disruption to our gas supply and believe that the gas distribution infrastructure will be more robust in 2014, enabling us to improve our margins even further.
At the same time we are looking at ways to diversify our fuel supplies to mitigate the impact of any future disruption and reduce the cost of using alternative fuels to gas,” Edwin said.