AbdulSamad Rabiu, Chairman of BUA Cement, has attributed the steep rise in cement prices to the actions of cement dealers, who thwarted the company’s initiative to sell cement at a lower cost.
Speaking at BUA Cement’s 8th Annual General Meeting in Abuja, Rabiu disclosed that his company had intended to sell cement at ₦3,500 per bag last year. However, dealers exploited the situation, reselling the cement to consumers at prices ranging between ₦7,000 and ₦8,000 per bag.
Rabiu explained that while BUA Cement had sold over a million tons at the reduced price, the dealers’ profiteering led the company to abandon the pricing policy, as it was not meant to subsidize dealers’ profits.
He also noted that BUA Cement could not regulate the prices in the open market, where dealers were making substantial profits.
In addition to dealer exploitation, Rabiu highlighted the impact of last year’s naira devaluation and the removal of the fuel subsidy, which made it impossible to sustain the lower pricing policy.
He stated, “We wanted that price to stay at that level, but dealers refused. So, we could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers.”
Despite these challenges, Rabiu asserted that BUA Cement has worked to prevent further price escalation, even as the cost of production has risen due to the dollar-denominated prices of energy resources such as gas, which is a significant cost for the company.
He provided an example of one of BUA’s plants, where the monthly energy invoice has soared to around ₦15-16 billion from a previous range of ₦3-4 billion.
The financial report presented at the AGM revealed that BUA Cement recorded a strong revenue growth of 27.4%, reaching ₦460 billion, up from ₦361 billion in 2022.
However, the devaluation of the naira in June 2023 and ongoing inflationary pressures have led to a 39.5% increase in production costs, totaling ₦276 billion compared to ₦197.9 billion in 2022.
Despite these difficulties, the company achieved a net profit after tax of ₦69.5 billion and declared a dividend of ₦2 per share.
