In 2023, Nigeria’s largest conglomerate, the Dangote Group, witnessed a substantial rise in input costs, reaching a staggering N1.398 trillion across its three quoted companies on the Nigerian Exchange Limited. This marks a notable increase of 27.09% compared to the previous year.
The audited full-year results of the companies tracked by Nairametrics reveal this surge in expenditure. These companies, predominantly owned by Africa’s wealthiest individual, Alhaji Aliko Dangote, encompass Dangote Cement Plc, Dangote Sugar Plc, and Nascon Allied Industries Plc.
The escalation in input costs is attributed to inflationary pressures and the depreciation of the Naira. This expenditure represents a significant portion, 51.21%, of the total revenue recorded by the firms during the review period, amounting to N2.730 trillion, up from N2.080 trillion in 2022.
Notably, the Dangote Group’s economic significance extends beyond its financial figures. With over 30,000 direct employees, the group’s performance significantly influences various value chains associated with its operations, impacting suppliers, distributors, and other stakeholders.
Inflationary Pressures Drive Up Costs
Recent data from the National Bureau of Statistics (NBS) indicates a surge in Nigeria’s inflation rate for January 2024, reaching 29.90%, a significant rise from the preceding month’s 28.92%. This uptick in headline inflation underscores the mounting economic challenges.
Comparing year-on-year figures, January 2023’s inflation rate of 21.82% starkly contrasts with January 2024’s 29.90%, indicating a substantial 8.08% increase. Moreover, month-on-month analysis reveals a notable rise from December 2023 to January 2024, with inflation climbing to 2.64%.
Inflationary pressures are evident across various sectors, notably in passenger transport, medical services, housing rentals, pharmaceuticals, accommodation, and air transport. These price hikes reflect a widespread inflationary trend beyond the food and energy sectors, raising concerns about increased manufacturing costs, particularly for raw materials like gas.
Financial Performance Breakdown
A closer examination of financial reports unveils the performance of key companies within the Dangote Group:
- Dangote Cement’s revenue surged 36.64% to N2.208 trillion, with total costs rising by 51.76% to N1.006 trillion in 2023.
- Dangote Sugar witnessed a revenue increase to N441.452 billion, although the cost of sales grew by 11.93%.
- Nascon Plc reported a 37.49% revenue rise to N80.828 billion, with operational costs increasing by 6.62%.
Despite revenue growth, operational challenges persist due to inflation and currency devaluation. Ravindra Singhvi, CEO of Dangote Sugar Refinery Plc, highlighted the company’s efforts to navigate these challenges, emphasizing supply chain efficiency and long-term projects like backward integration.
Optimistic Outlook Amidst Challenges
Despite macroeconomic hurdles, executives remain optimistic about the future. Arvind Pathak, CEO of Dangote Cement Plc, emphasized the effectiveness of diversification strategies in mitigating risks. Innovative approaches, such as fuel mix optimization and transitioning to Compressed Natural Gas (CNG) trucks, have bolstered revenues and protected margins amidst inflationary pressures.
