Three of Nigeria’s major quoted cement manufacturers - Dangote Cement Plc, BUA Cement Plc and HBM Nigeria Plc spent a combined N150.7bn on finance costs in the first half of 2026, representing a substantial decline from the previous year and providing a major boost to their earnings. The three companies had together incurred N267.7bn in finance costs in H1 2025, meaning that their aggregate financing expenses fell by approximately N117bn, or 44 per cent, year-on-year. The sharp reduction highlights a significant easing in the financing burden of Nigeria’s cement industry, which has been grappling with high interest rates, foreign-exchange volatility and substantial capital expenditure requirements. Dangote Cement accounted for the largest portion of the combined finance cost in H1 2026, with approximately N112.1bn, compared with about N216bn in H1 2025. This represents a reduction of roughly N104bn, or 48 per cent, in one year. The decline is particularly significant given the size of Dangote Cement’s operations and its extensive investment in production capacity across Nigeria and other African markets. Lower financing expenses helped strengthen its earnings as group revenue increased to N2.51tn, while profit after tax attributable to owners rose to N640.2bn, from N322.5bn in H1 2025. BUA Cement also recorded a substantial reduction in finance costs, from N38.14bn in H1 2025 to N22.14bn in H1 2026, representing a decline of about N16bn, or 42 per cent. More importantly, BUA Cement’s finance income increased significantly to N18.73bn, from N6.76bn, reducing its net finance cost to just N3.41bn, compared with N31.37bn in the previous year. This provided a major boost to the company’s bottom line. BUA Cement’s profit before tax increased from N214.8bn to N384.4bn, while profit after tax rose from N180.9bn to N324.9bn. HBM Nigeria also recorded an improvement in its financing position during the period, contributing to the overall reduction in the sector’s finance-cost burden. The company’s H1 2026 results showed strong profitability, with revenue of approximately N678.4bn and profit after tax of about N208.3bn. The combined figures show that finance costs consumed significantly less of the cement manufacturers’ operating earnings in H1 2026 than they did a year earlier. This is particularly important because financing expenses have traditionally represented one of the major constraints on the profitability of highly capital-intensive manufacturers The reduction means that the companies were able to retain a greater proportion of their operating profits after servicing debt and other financing obligations. It also potentially strengthens their capacity to generate free cash flow, finance expansion internally and maintain shareholder distributions. The companies also spent a combined N1.48tn on cost of sales in the first half of 2026, representing a 8 per cent increase from the N1.37tn recorded in the corresponding period of 2025. The increase was, however, significantly slower than the 23.7 per cent growth in combined revenue, which rose to approximately N3.92tn from N3.17tn in H1 2025. The figures indicate that the cement producers were able to grow sales considerably faster than their production costs, resulting in improved gross margins across the sector. The analysis, based on the companies’ unaudited H1 2026 financial statements, treats cost of sales as a broad measure of production and input costs, covering materials, energy and fuel, labour, maintenance, depreciation and other manufacturing expenses. Dangote Cement remained by far the largest spender, with group cost of sales rising to N924.31bn in H1 2026 from N835.56bn in H1 2025, an increase of N88.75bn or 10.6 per cent. The company’s cost of sales nevertheless grew considerably below its revenue, which increased by about 21.3 per cent to N2.51tn from N2.07tn. Consequently, cost of sales as a proportion of revenue declined to about 36.8 per cent, compared with roughly 40.3 per cent in the previous year. A major feature of Dangote Cement’s cost structure was the relatively stable energy bill despite higher production and revenue. The company spent N384.49bn on fuel and power consumed during the six months, compared with N387.19bn in H1 2025, representing a marginal decline of about 0.7 per cent. Energy and fuel therefore remained Dangote Cement’s single biggest production cost, accounting for approximately 41.6 per cent of total cost of sales. The moderation in the energy bill helped cushion increases in other input costs, particularly materials, which rose substantially during the period. The company’s H1 2026 production-cost breakdown shows that materials consumed increased to N225.41bn from N167.68bn, while staff costs rose to N38.84bn from N35.00bn. Royalties increased to N8.92bn from N5.00bn, while repairs and related costs climbed to N82.70bn from N70.48bn. At the same time, depreciation and amortisation declined to N81.27bn from N101.37bn, while plant maintenance costs fell to N86.30bn from N94.05bn. These movements helped limit the overall increase in cost of sales.

Posted: yestaday

Author: Editor in Chief

Current date: 14 August 2026