Dangote Cement Plc 2014 half year unaudited result for period ended June 30, 2014 released on Friday showed a weakened balance sheet and declined profitability indices compared with corresponding period of 2013.
The company’s liquidity ratios and assets quality dropped at double digit basis points, with quick and current ratios are far below acceptable standard of 1.5 and 2.0 having posted 0.37 and 0.51 respectively for the period.
Breakdown of the report shows that the company continues to survive on borrowed funds as working capital stood at a negative figure of N116 billion in the review period. Consequently, short term loan increased from N55.43 billion during half year 2013 to N104.78 billion in 2014. Current assets stood at N122.49 billion against current liabilities of N238.5 billion.
The company’s profit after tax decreased by 11.4 per cent to shed N12.24 billion having closed at N95.44 billion against N107. 7 billion reported in 2013. Return on equity dropped to 18.11 per cent from 19.58 in 2013 while profit margin declined to 45.7 per cent against 54.26 per cent in 2013.
However, details of the report revealed that turnover for the period improved by N10.5 billion or 5.26 per cent at N208.91 billion, as against previous second quarter’s N198.5 billion.
Cost of sales rose by 13.6 per cent from N66.3 billion to N75.3 billion; administrative cost also dropped to N8.7 billion from N8.9 billion; while selling and distribution expenses climbed N2.2 billion from N12.94 billion to N14.79 billion. This brought total expenses within the period to N23.5 billion, 8 per cent higher than the N21.8 billion reported for the preceding six months.
This left profit from operating activities of the company at N111.98 billion from N111.1 billion in the previous period.
Meanwhile, Dangote Cement’s share price reacted negatively to the results as the price dropped N5.0 per share from N231.95 on Thursday August 14 to N262 on Friday the following day. The price is expected to continue on downward trend as investors continue to react in the coming week.
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