HARRISON EDEH

NIGERIA’s three major cement producers used the first half of the year to strengthen earnings, protect margins and sharply reduce debt, as a more stable naira eased the foreign exchange pressure that had weighed heavily on the sector in 2025.

An analysis of the half-year results of Dangote Cement, BUA Cement and HBM Nigeria shows that stronger pricing, higher sales volumes, cost control and improved currency conditions helped the companies deliver double-digit revenue and profit growth.

Dangote specifically focused on reducing debt, while BUA borrowed to fund expansion, and HBM Nigeria moved to a virtually debt-free position.

Strong Revenue and Profit Growth

A cursory look at the reports shows the three companies recorded strong growth across key financial indicators in the review period.

Dangote Cement remained the largest performer, with revenue rising 21.3 per cent to ₦2.51 trillion and profit after tax increasing 22.7 per cent to ₦638.5 billion. Its EBITDA also rose 25.8 per cent to ₦1.19 trillion, while operating profit reached ₦1.06 trillion.

BUA Cement recorded revenue growth of 25.6 per cent to ₦728.9 billion, while profit after tax jumped 79.6 per cent to ₦324.9 billion, after operating profit stood at ₦371.3 billion.

HBM Nigeria, formerly Lafarge Africa, recorded the fastest revenue growth among the three, with revenue rising 31.2 per cent to ₦678.4 billion. Its profit after tax increased 57 per cent to ₦208.3 billion, while operating profit reached ₦290.9 billion.

The figures point to a strong earnings performance across the sector, with all three companies maintaining gross margins above 58 per cent.

The report indicated that Dangote Cement’s performance was supported by an 11.8 per cent increase in sales volumes to 14.9 million tonnes, while revenue grew much faster than volumes, showing the important role played by pricing in the company’s earnings.

According to the Chief Executive Officer of Dangote Cement, Arvind Pathak, the company’s results were supported by higher volumes, cost discipline and sustained demand.

“Our performance in the first half of 2026 reflects the strong momentum we have continued to build since the start of the year. The business delivered another solid set of results, supported by higher sales volumes, disciplined execution, and sustained demand across our key markets,” he said.

Pricing Power and Lower FX Pressure Lift Earnings

The performance of the cement companies was not driven by volume alone, as pricing power remained a major factor, allowing the companies to increase revenue despite the difficult cost environment.

At Dangote Cement, the 21.3 per cent increase in revenue compared with an 11.8 per cent rise in volumes suggests that higher prices played a significant role in the growth.

BUA Cement also expanded its revenue base, including a sharp increase in bulk cement sales, which rose to ₦40.2 billion from just ₦0.2 billion a year earlier.

HBM Nigeria also showed strong operational efficiency, as its production costs increased by 16 per cent, below the 31.2 per cent growth in revenue, which helped the company maintain a gross margin of 62.2 per cent.

The improvement in foreign exchange conditions was another major support for earnings.

BUA Cement recorded a net exchange gain of ₦16.6 billion, compared with ₦0.78 billion in 2025, an improvement that contributed to its sharp increase in profit.

Dangote Cement still recorded a ₦45 billion FX loss within finance costs, but the impact was more manageable than the previous year. The company consequently reported a record profit before tax of ₦981.4 billion, while HBM Nigeria recorded a modest ₦0.94 billion FX gain.

Stable Naira Gives Cement Makers Breathing Space

The relative stability of the naira in the first half of 2026 painted a brighter picture as the companies had faced significant currency pressure in the previous year.

It showed that the improved FX environment reduced the scale of losses and allowed the companies to focus more on operations, pricing and balance-sheet management.

The results also suggested that the cement makers were able to move away from dealing primarily with currency shocks and towards improving their underlying financial positions.

However, the new tax environment affected the three companies after applying the Nigeria Tax Act 2025, including the new four per cent Development Levy on assessable profits.

HBM Nigeria provided ₦13.1 billion for the levy, while BUA Cement provided ₦9.5 billion, even as Dangote Cement’s total tax expense increased to ₦342.9 billion.

Dangote Cuts Debt While BUA Funds Expansion

A further analysis of the performance shows that Dangote Cement reduced total borrowings from ₦1.08 trillion in December 2025 to ₦581 billion by June 2026, a reduction of about ₦499.4 billion.

The cement giant completely repaid a ₦299.6 billion parent company loan, reduced commercial papers, and cut both secured and unsecured bank loans.

The debt reduction was supported by strong cash generation, with more than ₦1.05 trillion in net cash from operating activities during the period, while its cash and cash equivalents almost doubled to ₦796.3 billion.

Pathak said the stronger balance sheet gives the company room to invest while maintaining discipline.

“We also ended the period with a net cash position of ₦215.2 billion, with cash balances exceeding total debt. This reinforces the strength of our balance sheet and provides us with the financial capacity to invest in future growth while maintaining a disciplined approach to capital allocation,” he said.

BUA Cement took a different route, as its borrowings increased from ₦469.38 billion to ₦620.28 billion, mainly because of additional drawdowns of ₦233.27 billion to finance expansion.

HBM Nigeria, meanwhile, reduced its loans and borrowings to zero from ₦1.9 billion, while maintaining cash of ₦330.6 billion.

Investors Face Different Growth Stories

While Dangote Cement is combining strong earnings with aggressive debt reduction, BUA Cement is using additional borrowing to finance future capacity, and HBM Nigeria is strengthening its balance sheet by eliminating borrowings.

Dividend payments also point to strong cash generation, as BUA Cement paid ₦338.6 billion in dividends, while HBM Nigeria declared ₦96.6 billion.

What remains clear from the results is that the companies entered the second half of the year with stronger earnings and, in different ways, improved financial positions.

Expansion Keeps the Competition Open

Dangote Cement continues to lead the sector in scale, but the other companies are also expanding their capacity.

Dangote’s export volumes from Nigeria increased by 62.3 per cent during the period, supported by 20 clinker shipments to regional markets.

The company is also advancing construction and commissioning of its new 6Mta Itori plant, which it expects to complete before the end of the year.

Pathak said the company remained focused on expanding production and exports.

“Once operational, Itori will enhance our production footprint, expand our export capacity, and move us closer to achieving our long-term ambition of 80Mta in installed production capacity by 2030,” he said.

BUA’s higher borrowing also reflects its expansion strategy, with loans being used to finance new capacity and other operational requirement.