Cement Sector GDP Growth Dips Amid Rising Costs ⚠️
Key Highlights:
1️⃣ Decline in Cement Sector Growth
• Year-on-Year (YoY): Growth fell to 2.30% in Q3 2024, compared to 4.20% in Q3 2023.
• Quarter-on-Quarter (QoQ): A slight improvement, rising from 1.74% in Q2 2024 to 2.30% in Q3 2024.
2️⃣ Ripple Effect on Related Sectors ️
• Real Estate Growth: Declined to 0.68% in Q3 2024 from 1.90% in Q3 2023.
• Construction Growth: Dropped to 2.91% in Q3 2024, down from 3.89% in Q3 2023.
3️⃣ Revenue Gains but Profitability Challenges
• Revenue Surge:
• Nigerian cement makers earned ₦2.5 trillion in the first nine months of 2024, a 69.1% increase from ₦1.5 trillion in the same period of 2023.
• This boost is attributed to rising local market sales and increased public-sector demand.
• Profitability Constraints:
• Foreign exchange losses totaled ₦300.97 billion, up by 122.32% in Q3 2024, negatively affecting major players like BUA Cement, Dangote Cement, and Lafarge Africa.
• Rising costs, Naira depreciation, and higher energy prices continue to strain margins.
4️⃣ Industry Outlook
• Public Sector Boost: Expected revenue growth in H2 2024 due to government capital expenditure, including ₦10 trillion in the 2024 budget and an additional ₦6.2 trillion in supplementary funds.
• Challenges Persist: High haulage costs, energy prices, and FX volatility are likely to pressure profit margins.
Analysts’ Recommendations
• Strategic Financial Management: Vital for mitigating costs and enhancing profitability.
• Policy Support: Stabilizing the Naira and reducing operational expenses could bolster the sector’s recovery.
Discussion Prompt:
With rising costs and FX volatility, how can Nigerian cement makers maintain profitability while driving growth? Let’s discuss!
Key Highlights:
1️⃣ Decline in Cement Sector Growth
• Year-on-Year (YoY): Growth fell to 2.30% in Q3 2024, compared to 4.20% in Q3 2023.
• Quarter-on-Quarter (QoQ): A slight improvement, rising from 1.74% in Q2 2024 to 2.30% in Q3 2024.
2️⃣ Ripple Effect on Related Sectors ️
• Real Estate Growth: Declined to 0.68% in Q3 2024 from 1.90% in Q3 2023.
• Construction Growth: Dropped to 2.91% in Q3 2024, down from 3.89% in Q3 2023.
3️⃣ Revenue Gains but Profitability Challenges
• Revenue Surge:
• Nigerian cement makers earned ₦2.5 trillion in the first nine months of 2024, a 69.1% increase from ₦1.5 trillion in the same period of 2023.
• This boost is attributed to rising local market sales and increased public-sector demand.
• Profitability Constraints:
• Foreign exchange losses totaled ₦300.97 billion, up by 122.32% in Q3 2024, negatively affecting major players like BUA Cement, Dangote Cement, and Lafarge Africa.
• Rising costs, Naira depreciation, and higher energy prices continue to strain margins.
4️⃣ Industry Outlook
• Public Sector Boost: Expected revenue growth in H2 2024 due to government capital expenditure, including ₦10 trillion in the 2024 budget and an additional ₦6.2 trillion in supplementary funds.
• Challenges Persist: High haulage costs, energy prices, and FX volatility are likely to pressure profit margins.
Analysts’ Recommendations
• Strategic Financial Management: Vital for mitigating costs and enhancing profitability.
• Policy Support: Stabilizing the Naira and reducing operational expenses could bolster the sector’s recovery.
Discussion Prompt:
With rising costs and FX volatility, how can Nigerian cement makers maintain profitability while driving growth? Let’s discuss!