This marks a 72% increase from the N2.12 trillion recorded in 2023.

The key cement producers—Dangote Cement Plc, Lafarge Africa Plc, and BUA Cement Plc—saw a significant rise in expenses, including production costs, administrative expenses, and distribution costs.

Financial reports for the year ending December 31, 2024, showed that Dangote Cement spent an estimated N2.48 trillion on these costs, a 65.9% increase from N1.5 trillion in 2023.

Production costs alone rose to N1.65 trillion in 2024 from N1.01 trillion in 2023, while operating expenses (OPEX) jumped from N491.64 billion to N839.2 billion.

BUA Cement reported N641.13 billion in production, administrative, and distribution costs for 2024, which is a 102% increase from N317.41 billion in 2023.

Drivers of high cost of production

One major reason for the high production costs was rising inflation, which made raw materials and other essential goods more expensive.

Nigeria’s inflation rate reached its highest level in nearly 30 years, hitting 34.8% in December 2024, up slightly from 34.6% in November. On average, inflation for the year stood at 33.2%, a sharp rise from 24.7% in 2023.

The falling value of the naira also made cement production costlier. By the end of 2024, the official exchange rate was N1,535 per dollar, showing a 40.9% drop from N907.11 per dollar in 2023.

In the parallel market, the naira weakened by 26.8%, trading at N1,660 per dollar, down from N1,215 per dollar at the end of 2023.

Additionally, policies in the oil & gas sector affected energy costs. Dangote Cement spent N679.94 billion on fuel and power in 2024, a big jump from N399.21 billion in 2023.

However, recent operational reports from top companies in the sector show a significant increase in sales volumes across all major producers in Nigeria.

Dangote, BUA, and Lafarge Increase Revenue, Profits

Despite economic difficulties, Nigeria’s top cement producers—Dangote Cement, BUA Cement, and Lafarge Africa—generated a total revenue of N5.15 trillion in 2024, a 68% increase from N3.07 trillion in 2023. Dangote Cement accounted for 69.4% of this revenue.

Dangote Cement’s revenue grew by 62.2% to N3.58 trillion, driven by higher sales volume and price adjustments due to inflation.

The company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) crossed the N1 trillion mark for the first time, reaching N1.38 trillion. Profit after tax (PAT) rose by 10.5%, totalling N503.2 billion.

BUA Cement saw its revenue almost double, increasing from N460 billion in 2023 to N876.5 billion in 2024.

The company also recorded a profit before tax of N99.6 billion, up from N67.2 billion, while profit after tax increased slightly to N73.9 billion, compared to N69.5 billion in 2023.

This growth happened despite a slow start to the year and a tough economic environment.

Lafarge Africa reported a profit after tax of N100.1 billion for 2024, which is a 96% increase from N51.1 billion in 2023. The company’s revenue also grew significantly, rising 72% from N405.5 billion in 2023 to N696.8 billion in 2024.

FG urges cement producers to slash prices

In related news, Legit.ng reported that the Minister of Works, Dave Umahi, has directed cement manufacturers to reduce the price of cement to N7,000 per bag.

He pointed to the new exchange rate and the drop in petrol prices as factors that have lowered production costs for manufacturers.

Umahi gave the manufacturers seven days to comply or risk being reported to President Bola Tinubu.