AbdulSamad Rabiu, Chairman of BUA Cement, stated Tuesday that cement dealers thwarted his company’s proposal to sell cement for N3,500 per bag last year.
Speaking at the company’s 8th Annual General Meeting in Abuja, Rabiu also stated that while his company sold over a million tonnes of cement to dealers at N3,500 per bag with the intention of passing on the benefits to end-users, the dealers sold a bag of cement to consumers for between N7000 and N8,000.
He explained that the corporation had to abandon the approach because their assistance was not intended to subsidise dealers. According to him, BUA Cement prices could not stop the dealers, who he said made big profits from the high margin, because the corporation had no control.
He said that the Naira devaluation last year, as well as the withdrawal of gasoline subsidies, contributed to the policy’s unsustainable nature. Rabiu stated: “So, many traders took advantage of such policy.
Rather than passing on the low costs, they were selling for more than double what we had sold them. “Some were selling for N7,000 to 8,000 each bag. They made a lot of money with the large margin.
I believe we sold over a million tonnes at N3,500 before we knew what the dealers were doing. “And then, because of the challenges that Nigeria encountered at the time about the devaluation of the Naira last year and the loss of gasoline subsidies, we could not bear the loss.
“We wanted the pricing to remain at that level, but dealers refused. So we couldn’t keep doing that simply because we didn’t want to be in a position where we were subsidising dealers. “I’m talking to the moment when the foreign exchange rate rose from around N600 to around N1,800 to the US dollar.
As a result, it became increasingly difficult for us to maintain that price policy. He did, however, state that the corporation has continued to endeavour to ensure that prices did not rise at the rate of the percentage increase in the Naira devaluation.
His words, “If you compare the exchange rate then and now, you will notice that cement is actually cheaper today than it was last year, because if the dollar rises, costs rise by the same margin, and the price of cement should be, perhaps, N10,000 Naira per bag.
The price of cement has increased by only 50%, from N4,000 at the beginning of the year to N6,000 today. “So, we personally fought to ensure that the price of cement does not rise above what it is currently.
“However, there are locations where everything revolves around the dollar. Energy is the most expensive. And our energy today is measured in bucks.
We mostly buy gas to power our plants. “And petrol is priced in dollars.” The chairman indicated that one of BUA’s units has a monthly billing of around N15 billion, possibly N16 billion. It used to cost N3 or N4 billion. That is only one example.
According to the financial report submitted by the company’s Board of Directors, the company’s sales increased by 27.4% to N460 billion from N361 billion in 2022, owing to its growing market share.
However, with the Naira’s devaluation in June 2023, and its continued depreciation, as well as rising inflation, the Company faced increasing price pressures, which affected production costs, increasing the total cost by 39.5% to N276 billion, compared to N197.9 billion in 2022.
During the year under review, a net foreign exchange loss of N70 billion was recorded, with N52.5 billion ascribed to finance charges. Despite these obstacles, the company made a net profit after taxes of N69.5 billion and announced a dividend of N2 per share.
