Dangote Cement’s Offshore Subsidiaries Red Again, Technically Insolvent
Dangote Cement’s offshore subsidiaries slipped back into losses despite higher sales, while the group posted stronger revenue and profit growth.
Dangote Cement’s Pan-African subsidiaries, operating across nine African countries, are back in the red after breaking the streak of many years of losses in 2025.
Accumulated losses have rendered the subsidiaries technically insolvent, as segment liabilities significantly outweigh assets.
The company’s offshore segment experienced a significant decline, moving from a N306 billion profit in Q4 2025 to a N10 billion net loss in Q1 2026, according to their interim financial report.
The cement company faces significant challenges in profiting from international revenue. Our analysis of the 2025 full-year report, therefore, questioned the future profitability of their offshore investments.
The subsidiaries’ return to losses is due to the absence of the significant finance income that drove last year’s profits, compounded by a shift from net exchange gains to losses.
Operating profit remains a tiny fraction of sales revenue for the subsidiaries, leaving quite insufficient room to deliver profit from normal operations.
Sales revenue from the offshore operations improved from N322 billion in the same quarter last year to about N370 billion – an increase of N47 billion. However, segment operating profit declined from N40 million to N33 million over the period.
While offshore operations accounted for 31 per cent of Dangote Cement’s group sales revenue of roughly N1.20 trillion for the first quarter, their contribution to profit is negative.
Past losses have depleted the offshore segment’s equity, rendering it technically insolvent. The segment carries total liabilities in excess of N4 trillion against total assets of N3.11 trillion as at the end of March 2026.
The subsidiaries had closed the 2025 operations with aggregated liabilities of N4.22 trillion against total assets of N3.22 billion. This position isn’t expected to heal any time soon, as profit generation remains far-fetched.
Group operations show gains on both cement output and sales volume in the first quarter, with cement production up from 6.55 million tonnes to 7.21 million tonnes year-on-year.
Sales volume is also up from 6.57 million tonnes to 7.47 million tonnes over the same period. This is a recovery of both production and sales volumes from declines in the preceding year.
Group turnover grew by over N203 billion or 20.4 per cent year-on-year to close at N1.20 trillion for Dangote Cement in the first quarter.
This is unlike in the previous year, when the increase in sales revenue was accounted for exclusively by product price increases.
Sales revenue from the domestic market rose by 23.8 per cent year-on-year to the region of N862 billion at the end of the first quarter, reflecting both sales volume gains and further price increases.
The company’s management maintained a moderate cost position with production cost increasing by 10 per cent to the region of N449 billion, one-half the increase in sales revenue. The cost savings powered an increase of 27.6 per cent in gross profit to close at N749 billion for the quarter.
Operating profit went up by 27.3 per cent to N506 billion despite pressure from administrative expenses as well as a sharp drop in other income.
A big cost saving came from finance expenses that dropped from N129 billion to N98 billion over the review period. The drop enabled an increase of 35 per cent in pre-tax profit to N421 billion for the quarter.
The drop in finance cost reflects a major cut down in interest-bearing financial liabilities for the second year from N1.16 trillion at the end of 2025 to N745 billion at the end of March.
After-tax profit for the period rose by 53.6 per cent to N321 billion at the end of March, which translates to improved earnings per share from N12.29 to N19.14 over the period.
Comments are closed.