Dangote Cement’s Offshore subsidiaries post N250bn profit, first time in 12 years

…As prospects for losses is still high

By Omodele Adigun

Dangote Cement’s stream of losses from its offshore subsidiaries, which had been incurred continuously since 2014, took a historic turn in the second quarter of 2025, and for the first time in 12 years, recorded a profit of N250 billion. Yet the subsidiaries are just one step away from slipping into the red. Losses from the company’s pan-African business continued up to the first quarter of 2025, when a loss of N110 billion was returned to the Nigerian economy and investors. The loss from the first-quarter operation has now been overwritten by the second-quarter profit, following a net contribution of roughly N140 billion profit to the group at the half-year.

The interim financial report of the multinational cement-producing organisation for the half-year ended June 2025 shows that the profit from the Pan African subsidiaries accounts for over 46 per cent of the group profit figure for the second quarter. Net of eliminations, group profit after-tax amounted to over N311 billion for the quarter.

Dangote Cement’s Losses/Profit from Offshore Subsidiaries

Year      Amount Nb

2014        -15.5bn

2015        -23.6bn

2016        -21.0bn

2017        -12.8bn

2018       -87.9bn

2019       -85.3bn

2020      -81.1bn

2021       -30.6bn

2022       -111.5bn

2023        -4.8bn

2024        -24.4bn

2025Q1   -101.1bn

2025Q2   +250bn

Source: Company’s Financial Reports

The break in transmission of losses from offshore operations that summed up to N610 billion at the end of the first quarter, however, needs to be read with caution because it happened outside the normal operational flow.

There is a loss of sales revenue from offshore operations, with turnover for the second quarter down year-on-year from about N426 billion in 2024 to N359.5 billion for the second quarter of 2025. Operating profit for the period is less than N21 billion, down from N76.6 billion in the same period last year.

What made the difference between the modest operating profit and the big bottom line for the quarter is the absence of exchange losses that had bloated finance expenses last year. This reflects the general stability of the naira against the currencies of the group.

The company’s cost-income pattern continues to show a structural imbalance in its offshore operations. The indication is that, beyond the one-off exchange losses elimination that produced the profit in the second quarter, the prospects remain quite high for a return to the path of losses.

Group operating results for the half year reflect constraints in sales volume and revenue, but cost savings boosted margins and delivered a significant growth of the bottom line.

Group sales volume declined at the half-year to 13.36 million tonnes against 13.93 million tonnes in the same period in 2024, reflecting a reduction in production volume. With price adjustments, however, sales revenue grew by 17.7 per cent year-on-year to close in excess of N2 trillion for the half-year. This is a sharp slowdown from the 62.7 per cent leap in sales revenue to N3.58 trillion at the end of 2024.

Reduced product output with increased sales means limited production cost with increased gross margin. The cost of sales was only slightly up at N853.6 billion against the much stronger growth in sales, resulting in a 31.4 per cent in gross profit to N1.22 trillion at the end of June 2025.

Cost savings were also extracted from operating expenses to achieve a second level cost moderation that again raised the operating profit margin. Operating results therefore gained speed at a 47 per cent increase year-on-year to stand at about N811 billion at the half-year.

A third level cost savings came from a big cut in finance expenses led by the absence of foreign exchange losses so far this year. The cost of finance declined by 35 per cent year-on-year to N216 billion at the end of June 2025. The drop is accounted for exclusively by nil foreign exchange losses that were as large as over N201 billion in the same period last year.

With the three-level cost savings, the company addressed the heightened production cost, operating and finance expenses that posed a lot of challenges to management in 2024.

The summary of Dangote Cement’s earnings story at half-year is that slowing sales were more than compensated by all-around cost savings that elevated profit margin and magnified the bottom line.

The company closed the half-year trading with an after-tax profit of N520.5 billion, a 174 per cent increase year-on-year and already in excess of the closing profit of N503 billion for 2024. Net profit margin revived from 10.8 per cent in the same period in the previous year to 25.1 per cent at the half-year.

The company earned N30.74 per share at the half-year, advancing from N11.28 per share in the same period last year.