WoundedLamb:


But we were talking about net profit margin.

I wouldn't expect anything different considering the metric you're using, EBITDA margin. Dangot has most of his assets (fixed assets and financial assets) in Nigeria. If the cost of operation is higher (as expected), it's definitely cause of the asset related expenses like depreciation, amortization, debts, interest payments, etc. and taxes. All these would definitely his reduce net profit and bring it closer to those of other countries where cost is mostly COGS and admin expenses.

However, the metric you are using is EBITDA margin which does not put all these assets related expenses into consideration thus creating a wide gap between the location with more assets and those with fewer assets. EBITDA does not even consider the tax structures in both countries. It says nothing about the debt capitalization of the companies. It's an overly simplified metric better suited for comparing companies with similar operating conditions. Companies only make their EBITDA public to attract investors while hiding the real deal, net profit. That's called window dressing.

Dangote's net profit in Nigeria might be higher as his price definitely goes up with demand while higher productin output also reduces his cost of production (economy of scale). But EBITDA margin only exaggerates that by hiding costs that are definitely higher in Nigeria. Of course, I cannot say for sure, but I don't think the net profits would be this far apart. And like I said earlier, the mere currency conversion done by the OP does not really say much.

The cost of operation in Nigeria is not higher -- get this through your mushy Nigerian brain . In 2020, Dangote generated total revenue of 1,034,196 million naira and net profit before tax of 373,310 million naira. That's a 36% margin (more than even the operating profit margin of a Ferrari), and note that COMBINES the Nigerian segment with the less profitable Pan Africa segment.

If we looked at the Nigeria segment alone, its net profit margin before tax is still likely above 50%, which means he is selling for double his cost of production, even accounting for depreciation, amortization, and interest expense. Cement net profit margins in the U.S hover between 1% and 5% for comparison. Sometimes I wonder how I was cursed to share a nationality with you people. All the information is available, but you refuse to see reason.

Permesso:


He's looking for quick money to invest and finish his Gigantic refinery in Lagos. He's as greedy as Nnewi man. Ibeto should come out and do his justice, but his no where to be found. Can you imagine 1500 in Zambia while Nigeria where it's produced and soursed is unattainable in price.

Ibeto is a coward. He makes no noise or protest. Atleast Rabiu has the sense to stand up for himself in the media and the courts, Ibeto prefers to beg behind the scenes like a dumbass. Weak pitiful man.

rhektor:


None of the campaigners will answer this question, it is a targeted campaign against the person of Dangote. BUA, Larfarge, Ibeto etc still sells at the same price but Dangote is the demon lol. If Larfarge and others aren't thieves too they should crash price and watch Dangote crash in the cement industry but no they won't they'll rather pay influencers to push narratives against their competitors. The way we do business in this country shows how wicked a people we are

Rabiu is asking the government to liberalize the industry and allow more companies to get involved.

Staphylococcus:


You said it all!

Why cant Ibeto sell for One Hundred Naira if he means business. Trying hard to put their woes on Dangote.

Who will buy Dangote if Ibeto sells for One Hundred Naira.

Hate wont make people see the reality. Coupled with jealousy and envy

price war is not the solution. The solution is to liberalize the industry and allow more companies to get involved or allow imports

BluDesk:



I hope you are aware that there's a law that repels/prohibits independent power generation once it exceeds 1MW. If we were been honest, how come are some organizations rising up going around this to produce as much power as they desire
.. I'm not anti progressive but I know a 1/5MW Turbine would produce relatively cheap power to produce virtually anything.

Well, Dangote is now producing more electricity than the Nigerian government. I read somewhere that the private sector is producing 18,000 MW for their own consumption. The national grid is only 5,000 MW

Ibrahimmrfish:

How much is corporate tax in south Africa and is their power situation the same with Nigeria,were all factories uses generators?

The cement industry doesn't use generators. Dangote has his own power plants, which means he gets his electricity at less than its cost of production (because of the synergies between cement production and electricity generation).

BluDesk:



Perhaps the younger generation should sit back
Cement started climbing at 70 Naira need. From 70 Naira to 100 Naira, to 110 Naira to 200 Naira, and to 200 Naira, then before 500 Naira

And we were importing.

That's because the currency was devaluing. If you compared those prices to dollars, it was cheap. Now, Nigerian cement prices are exorbitant, even in dollars or any foreign currency. 4,000 naira is around $10 or 717 Indian rupees. But look at cement prices in India -- only 320 rupees or 1800 naira.

Lucrativress:

Dangote is at the fore front and as it is,our governments are handicapped when it comes to him so it is okay to unleash our aggression on him

Exactly!

TSBO:


Then shouldn't this agitation be directed at the government. If it was not Dangote, it would likely be someone else. That's just how it is.

Dangote has agents inside the government. He is basically part of the government.

Krismas:
. I don think so. construction companies run their own quarries, produce thier own cement. They dont depend on Dangote

Which company are you talking about?

TSBO:


Lol @ demand curve. I understand you, but that's one postulation as to why demand is low. As you would know, there are probably other factors responsible as well. Not saying price isn't.

This fight should probably be with the Government. They make the policies. And I'm sure they have their reasons - however sincere, dishonest, thoughtful or unreasonable they might be.

The reason is that Dangote is bribing them.

EMIOMOADEOYE:


Let me ask you a question

If you produced something for N10 and then you sell it for N20, you ae making a profit right?

What if after running some tests, you discover that that instead of selling for N20, you can sell for N1000 and demand will not be affected, will you say because it is not right you will not sell at N1000?

The problem is that he used corruption to kick other players out of the industry. Look. Every modern country has consumer protection laws to prevent price gouging and ensure competition in the economy -- im simply arguing for the same in Nigeria. Stop reasoning like a monkey and use common sense please.

Krismas:
U see, u are stylishly stammering. U say Dangote control 60% of market shares? Then there is no better way to ruin him, than competitors lowering prices. It happened to Gala. Nothing stops the rest from producing a formidable front against him, Many of them were in the business b4 him. But u see, they are enjoyihg it.

Cement is a undifferentiated product. Dangote would win any price war because he has deeper pockets. The only solution is to bring more companies into the industry or allow imports. Stop reasoning like a monkey.

TSBO:


Cement capacity utilisation in Nigeria is not high. I do not think it is accurate to say cement producers cannot meet demand. If I am correct, demand has not been growing rapidly in the past few years, and supply has been tracking demand closely. Even if a lot of demand is truly unmet (which I do not think is true), why aren't cement producers ramping up production/utilisation?

I am neither agreeing nor disagreeing to your position on Dangote. This is Nigeria and I must say that Government is a major major risk factor for any business operating here. While other cement producers may be complaining when policies do not favour them, I definitely think they like the wider margins they earn in this market.

On imports, there is the need to assess whether imports would be net positive for the economy or not. Banning imports of course is a form of support for domestic companies, therefore, we cannot just say imports should be allowed without a clear indication of its net impact.

The bottom line is that the Nigerian cement manufacturing industry is one where strong government support is central. Even if there was no Dangote, as long as the policies are there, and there are willing investors, I am not sure things would be much different.

Lastly, compare the margins of the different producers. Could they really have survived if Dangote had kept EBITDA margins much lower? Lafarge is just coming out of financial rut and all those small companies BUA consolidated would probably have died before he thought to acquire them.

Again, I am neither for or against here, just a discussion.

Sigh, you have to understand something called the demand curve. When prices are kept artificially high, demand will be at an artificially low level. This is why you need heavy competition in the industry. Cement is supposed to be a low margin industry where you sell massive volume to make a profit, not an industry where you produce below capacity and jack up prices.

WoundedLamb:


Hhmm.... Do you know their profit margin in both countries? Do you have access to their costing sheet and pricing details? Do you have access to their balance sheet and P/L reports? OP only shared the cost of a bag cement when converted to NGN. It wouldn't make any financial sense to address that in isolation. How much does he pay employees there? How much do tenants pay there? Maybe when we covert all those to NGN and put other economic factors into consideration, we'd have a better idea. But we definitely can't just compare the prices at face value. I don't live in Nigeria and my monthly house rent, when converted to NGN is more than 550k. If you multiple that by 12 and compare the product with the annual rent of similar apartments in Nigeria, you'd also believe it's outrageous. But it isn't and when all factors are considered (income vs expenditures), you'd see it has more or less the same value in Nigeria. Actually, I don't know if Dangote's margin is high or low but I think it'll be very similar in both countries.

Dangote's margin in Nigeria is almost three times what it is in other African countries. I have analyzed all his financial statements.

Public pressure against Dangote is growing.

Lucrativress:

I don't expect change to happen all at once but we can start from somewhere
Why not everyone boycott Dangote's product's?
We Nigerian's are after the name,we will still go for his product's.
If we start boycotting him and going for other companies, we will be giving them our supports and this in turn will boost other investors morales to venture into the production.
We Nigerians see a problem, we know the root but yet we do nothing.
Look at the issue of Banks
Have we sat down to ask ourselves why POS business is now really booming everywhere in the Country??
This is totally wrong,a Bank will have about 6 ATM's and only one working,forcing people to use POS and pay #100,every sector is ripping us off but yet we take no actions,we only complain and leave it..
This will keep happening till we start talking about the minor issues and actioning the solution

The only thing Nigerians listen to is violence, unfortunately. We fix the cement industry with massive protests. Like ENDSARS.

SenecaTheYonger:
Lol, when I said Dangote is the single biggest reason why accommodation is becoming unaffordable you won’t believe me.

Nepotism is very bad.

He is single-handedly destroying Nigeria. Building a road cost 4x what it cost in other countries. Building a hospital costs 3x and building a mall cost 2x.

PAWG:


Has it made fuel cheaper? It’s easy to spot your type, it always ends in insults.

You’re under no obligation to respond to me, I will leave you on your high horse

Nothing you say makes sense. Why are you brining up fuel, which is influenced by subsidy and international oil prices? This is not comparable to cement. I don't know what they teach you people in school, but you lack basic reasoning.

PAWG:


Oga before you jump to assume, I’m happy you used the words ‘...should be cheaper’, unfortunately it’s not cheaper. Expectations != Reality, this is Nigeria. Production doesn’t end in the factory, take distribution into cognizance (cost of moving the goods and all, mind you Nigeria is bigger and you’re covering more ground). In fact the Distribution chain is longer in Nigeria, wholesalers hoard the product and cause temporary shortage.

You are talking nonsense. Dangote earns a 60% EBITDA margin in Nigeria compared to 22% in other African countries. Until you can explain that, shut the hell up.

brandsoncharlie:

Why was larfage fined in Zambia from high price of cement but Dangote cooperated?

Open your eyes. Dangote bribed them not to fine him.

Why am I singling out Dangote? BUA Group has made it clear that they are not a part of the cartel and Rabiu is now openly calling for the government to liberalize the industry. La'Farge is an international company. Dangote is the only one standing against liberalizing the industry.

PAWG:


We’re not stupid, weren’t we importing the product before?

As we’re importing fuel has it made the commodity cheaper?

Yes you are stupid. Importing introduces competition so the domestic companies can't increase prices anyhow.

yommygift15:
We have at least five different Cement products in Nigeria and no one is selling lesser price than him, what do you have to say concerning that? end Dangote protest will only kill some family ooo

I've explained this numerous times. Liberalize the market. Allow imports if local companies can't produce at a reasonable price.

jaxxy:



Dangote doesn’t seem to like open market and competition. What is his problem??

He is a typical corrupt African lunatic. Just like Abacha in the cement industry.

PAWG:


Bro, leave China out of this, China is an innovating economy WITH CHEAP LABOUR LIKE INDIA we’re mainly consumers. Please don’t even try it. The laws of economics don’t work in Nigeria, go and ask Soludo.


Don’t tell me about Economies of scale, I understand it VERY VERY WELL

If you understood economies of scale, you wouldn't say that cement production should be cheaper in a tiny country like Zambia compared to Nigeria. That makes absolutely no sense.

PAWG:



Can I ask you an honest question? Where are you from?

The U.S. But I'm also a Nigerian citizen.

PAWG:



Guy really this:

“Our ex-factory price is still about N2,700 per bag, but cement is selling between N3,500 and N3,800. I had to stop my people from collecting money last week, simply because we are collecting money much more than what we can produce,” he said...


That’s greed from retailers, is it Dangote that caused it?

Nigerians are wicked to themselves that’s why things are expensive. Imagine a retailer wanting to make more than the manufacturer. It happens everywhere, enter the market and try to buy a pair of shoes or an Aba made suit, the asking price will shock you.


We’re too greedy

It's not greed. THERE IS SCARCITY IN THE MARKET. The solution is to liberalize the industry OR allow imports. Why are Nigerians so damn stupid?

PAWG:



Why are the salaries of Dangote Nigeria higher than those of Zambia. Have you guys considered the cost of transportation? Even my state is bigger than Zambia.

Stop the demonizing campaign. How about Lafarge, are they saints?

You don't understand basic economics. Economies of scale -- look it up. The larger a market is, the cheaper it is to produce. This is why large countries like China lead in manufacturing. SCALE.

Construction is one of the largest employers in the world. Dangote has destroyed millions of jobs with his cement oligopoly.

PAWG:



How about my other question, is Dangote the only Cement manufacturer/importer? Why aren’t others selling at lower prices, or is it Dangote that fixes the price of cement?

Dangote Nigeria isn’t a charity, I could say he’s one of the largest employer of labor in Nigeria, how do you think he sustains that?

For every 1 job Dangote creates in his cement factory, he destroys 10,000 jobs in the construction industry because of his unreasonable prices. Nigeria's unemployment rate is high mainly because of Dangote. We would actually have more jobs if we allowed imports.

itubaba001:

If place your point of argument on these facts . What about elephant clement . Why have they not reduce their prices tremediously so as to kick DC out of d market . I think the cost of doing business in nigeria is the issue .

The problem in Nigeria is scarcity. All of the companies are struggling to meet market demand, hence the high prices.

The solution is to allow imports or allow more companies to join the market.