Dangote Cement Plc and BUA Cement Plc spent a whopping sum of N173.537 billion in fuel and power during the half year ended June 30, 2022, a 38.34% increment from N125.44 billion recorded during the comparable period of 2021.
Nairametrics analysis shows that, this represents 41.33% of the total cost of sales of N419.965 billion recorded by the cement firms during the period under review.
This was contained in the unaudited half year results of both companies tracked by Nairametrics. Some of these cost pressures were due to the depreciation of the Naira while others were due to macro-economic inflationary pressure, especially in the domestic market where average inflation heightened.
After years of privatisation of the power sector, manufacturers are yet to see any appreciable improvement in electricity supply, forcing them to rely heavily on in-house power supply at huge cost. Yet, power constitutes the single critical infrastructure to boost the manufacturing sector and create jobs.
Inflation rate increased to 18.60% as at end of June 2022, the highest in 11 months due to increased food costs, supply chain disruptions, the depreciation of the naira, insecurity, and deteriorating infrastructure.
According to data tracked by Nairametrics, profit after tax of these companies stood at N233.668 billion from N235.026 billion in 2021 representing a marginal 0.7% decrease. This was due to the rising cost of sales which swallowed much of the earnings following rising inflation and high exchange rate.
Cost of sales for the firms stood at N419.965 billion for the half year 2022 as against N342.275 billion in 2021, accounting for a growth of 22.7%.
