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Johannesburg - Dangote Cement signalled it may ease the pace of adding new capacity amid foreign exchange constraints in its home market of Nigeria, as Africa’s largest producer of the building material reported a decline in first-half profit.
Profit for the six months through June declined to 106.3bn naira ($342m) from 123.1bn naira a year earlier, the Lagos-based company said in a filing to the Nigeria Stock Exchange on Thursday. Revenue increased 21% to 292bn naira.
"We have achieved a commendable result, given the very challenging situation in our main market and general economic weakening across Africa," chief executive officer Onne van der Weijde said in an e-mailed statement. While the company remains committed to its ambitious plans, "we are taking a more measured approach to the roll-out of new capacity across Africa," he said.
Dangote Cement, controlled by Africa’s richest man, Aliko Dangote, has more than doubled production capacity since 2013 and said in April it may increase cement capacity by a further 77% by the end of 2019.
Foreign-exchange constraints in Nigeria have prompted the company to reconsider the pace of its expansion and now believes a five-year building program is more appropriate, it said.
Earnings in the period were affected by lower selling prices, higher fuel costs and the fact that several new plants are still in less-efficient start up phases, the company said.
Cement sales volumes in the period increased 60%, bolstered by record volumes in its home market, where the company announced a price cut last September, as well as new plants elsewhere on the continent.
The devaluation of the naira will affect costs in the country and Dangote will seek to protect its profit margins, Van der Weijde said.
