JUST IN: N3, 500 Per 50kg Bag? BUA Breaks Silence, Speaks On Selling Cement At N3, 500/Bag As Prices Skyrocket
BUA Cement Plc, one of Nigeria’ s leading cement producers, has raised concerns over the soaring prices of cement across the country, attributing the issue to the activities of middlemen, or ‘ dealers. ‘
The company’ s Chairman of the Board of Directors, Abdul Samad Rabiu, made this accusation during BUA Cement’ s 8th Annual General Meeting held in Abuja on Thursday.
Rabiu expressed disappointment that despite the company’ s efforts to maintain affordable cement prices, dealers have manipulated the market to their advantage, leading to inflated prices for consumers.
He highlighted that BUA Cement had set the price of a 50kg bag of cement at N3, 500, a move designed to make the product more accessible to the general public. However, this price reduction has not benefited end users as intended.
” We sold cement to the dealers at a price that would allow them to sell at N3, 500 per bag, but their desire for excessive profits led them to sell at N7, 000 and above, ” Rabiu said, criticizing the greed of these intermediaries as the primary cause of the high cement prices currently affecting the market.
Supporting Rabiu’ s statement, BUA Cement’ s Managing Director, Yusuf Binji, acknowledged the difficulties in controlling retail prices due to the company’ s distribution model. He explained that BUA Cement sells to distributors, who then sell to retailers before the cement reaches the final consumers. This multi- layered distribution chain, according to Binji, complicates efforts to enforce pricing regulations.
” Our model involves selling to distributors, who then sell to retailers before the cement reaches the end users. This multi- layered distribution chain makes it difficult for a private company like ours to enforce pricing, ” Binji explained. He further emphasized the need for government intervention to regulate cement prices at the consumer level.
Despite these challenges, Binji noted that the company has seen relative price stability since the adjustments made in early 2024. He credited this stability to the industry’ s positive response to government pleas and the collaborative efforts with the Ministry of Trade and Industry.
In addition to price moderation, BUA Cement has been focusing on increasing its production capacity to meet the growing demand for cement. In the second quarter of 2024, the company commissioned two new production lines, adding six million metric tons per annum to its existing capacity. This expansion is expected to ease supply pressures, especially during peak construction seasons, when demand often exceeds supply, leading to price increases.
” We believe that with the moderation in the exchange rate and our increased capacity, the outlook for 2024 is very positive, ” Binji asserted. He also hinted at the possibility of price reductions if the Naira appreciates, allowing the company to further adjust prices in favor of consumers.
To address the risks associated with transporting Liquefied Natural Gas (LNG) over long distances, BUA Cement is investing in energy infrastructure to ensure self- sufficiency. The company is constructing a mini LNG plant in Ajaokuta, which is designed to supply its Sokoto plant and potentially other locations. This strategic move is expected to reduce the company’ s reliance on external energy sources and ensure a steady supply of power to its operations.
The new LNG plant, with a capacity of 700 tons per day, represents a significant investment running into hundreds of millions of dollars. This facility will enable BUA Cement to convert LNG into gas and distribute it efficiently across its production units, enhancing operational efficiency and reducing production costs.
Despite the challenging macroeconomic environment, BUA Cement recorded impressive financial results for the year 2023. The company reported a 27. 4 percent increase in net revenue, rising to N460 billion from N361 billion in 2022. Capacity utilization also improved to 61. 2 percent from 59. 8 percent in the previous year, driven by higher cement volumes dispatched, which bolstered the company’ s market share.
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However, the company faced setbacks in its profitability, with profit after tax declining by 31. 2 percent to N70 billion from N101 billion in 2022. This decline was primarily due to foreign exchange losses stemming from the devaluation and continued depreciation of the Naira.
In light of these results, Rabiu expressed confidence in the company’ s future prospects, underpinned by its strong performance and strategic initiatives. The Board of Directors recommended a dividend of N2 per share for the year ended December 31, 2023, to be distributed to shareholders listed in the register of members as of August 9, 2024.
