UPDATE - Dangote Cement spent N196 billion on fuel and power in 2021 due to inflationary pressure

 Dangote Cement Plc has disclosed that fuel and power consumed by the company increased

by 34.4% to N196.634 billion in 2021 from N146.342 billion in 2020.

The Group Chief Financial Officer, Dangote Cement, Mr. Guillaume Moyen who disclosed this at the company’s 13th AGM said the increase was as a result of volume growth and inflationary pressures on the costs.

What the company is saying

Moyen said, “In total, manufacturing costs increased by 25.8% to N551.0 billion from N437.9 billion in 2020 while fuel and power consumed increased by 34.4% to N196.6 billion from N146.342 billion and materials consumed increased by 30% to N175.4 billion from N134.91 billion. 

“The increase in Nigeria’s manufacturing costs was mainly driven by energy costs due to increased production volumes and price increases for gas which is pegged to the US Dollar. The Nigerian naira depreciated from N401/1US$ at the end of 2020 to N424/1US$ at the end of 2021.

“Thanks to our continuous cost control efforts, total selling and administrative expenses only rose by 19.6% to N256 billion in 2021 mainly from higher haulage expenses which are driven by volume, AGO costs and other general administrative expenses. Inflationary pressure and the foreign currencies’ conversion to Naira is driving part of this increase.”

Key challenges

The Group Managing Director, Michel Puchercos said one of the biggest challenges the company faced in 2021 was the increased inflationary pressure across cost lines.

• Puchercos said: “We experienced a significant increase inn our energy costs and spare parts. Some of these cost pressures were due to the depreciation of the Naira while others were due to macro-economic inflationary pressure, especially in our domestic market Nigeria where average inflation was at 16.95% in 20921.
• “Nevertheless, we closely monitored all our cost lines and working capital needs through our disciplined cost control measures. Our plant efficiency initiatives, high productivity of the new assets deployed, and better-fixed cost absorption across the group enabled the offsetting of inflationary pressures on most of our cost lines.
• “We experienced supply challenges and increased sea freight costs which resulted in the volatility in the landing cost of clinker and cement. Countries importing clinkers such as Cameroon and those importing cement such as Ghana and Sierra Leone faced challenges due to freight prices and material price volatility.”