April 24 (Lagos) - This afternoon Dangote Cement Plc (
DANGCEM ) published its Q1 2018 results which showed that PBT grew strongly, by 40% y/y to N108.4bn.
The stellar results were driven by a combination of factors including sales growth of 16% y/y, a gross margin expansion of 197bps y//y to 59.8% and a net finance income of N4.6bn (compared with a net interest expense of –N5.9bn in Q1 2017).
The net finance income was driven by fx gains of N12.5bn. Despite a 572bp y/y increase in the effective tax rate to 33.5%, PAT advanced by 35% y/y to N80.0bn, thanks to a positive result of N10.8bn in other comprehensive income (OCI) compared with N1.3bn in Q1 2017. Sequentially, although the trends mirrored the y/y ones, the growth was amplified.
Compared with forecast of analysts at FBN Quest in Ikoyi, sales were broadly in line. However, PBT and PAT beat by 27% and 14% respectively, due to positive surprises in gross margin, opex, net interest expense and the OCI.
Similar to prior quarters, Nigeria was the key driver of performance. Unit volumes for Nigeria grew by 5% y/y to c.4.0 million metric tonnes (mmt). This is the first quarter of growth after five consecutive quarters of unit volume declines and is a broad indication that the nation is on a path of economic recovery.
On the back of unit volume growth, sales for the Nigeria division was up 14% y/y. In terms of margins, EBITDA margin for Nigeria was stable at 66.3%.
In contrast, unit volume for the Pan-African operations declined by 4% y/y to around 2.2mmt due to lower sales recorded in Tanzania and Ethiopia. However, sales for the segment grew by 16% y/y due to higher prices in countries like Cameroon and Sierra-Leone relative to Q1 2017.
DANGCEM Q1 2018 PBT tracks ahead of consensus 2018E PBT of N323bn. As such, we expect to see upward revision to consensus 2018 PBT forecasts and a strong positive reaction from the market.
They rate the
DANGCEM shares as Neutral. Analyst estimates are under review.
reporting for easykobo.com on Tuesday, April 24 2018 from Lagos, Nigeria
Source - analysts at FBN Quest in Ikoyi. All opinions/forecast mentioned in above article are those of analysts at FBN Quest in Ikoyi. Easykobo does not endorse or oppose any views expressed in above article.