Dangote Cement Plc has embarked on a groundbreaking share buyback program, repurchasing approximately N41.2 billion worth of its issued shares from open transactions at the stock market.
The move comes as the company aims to reduce its issued shares by 10% under the newly approved buyback scheme.
According to regulatory filings at the Nigerian Exchange (NGX), Dangote Cement executed several transactions over two trading sessions to buy back about 0.71% of its issued share capital from the open market. In the first tranche of the share buyback program, the company successfully repurchased 121.40 million ordinary shares of 50 kobo each, valued at N41.16 billion. The average purchase price stood at N339 per share, slightly below the group’s initial target.
Following the completion of the first tranche, the total number of issued and fully paid outstanding shares of Dangote Cement has reduced to 16.75 billion ordinary shares of 50 kobo each.
The repurchased shares will be held as treasury shares, with the possibility of subsequent cancellation.
The share buyback program received resounding support from shareholders at an extraordinary general meeting in December 2022.
The approved scheme adheres to the framework provided under Section 186 (c) of the Companies and Allied Matters Act, No. 3 of 2020 (CAMA), and Rule 398 (3)(xiv) of the Securities and Exchange Commission (SEC)’s Rules and Regulations, 2013, in accordance with Rule 13.18 of the Rulebook of the Nigerian Exchange (NGX), 2015.
Under the new program, Dangote Cement can repurchase shares up to 10% of the group’s issued capital. The buyback will be carried out at the discretion of the company’s appointed stockbrokers, considering prevailing market conditions and adhering to the current daily trading rules of the NGX.
It is important to note that Dangote Cement is not obligated to purchase all shares put on offer during the specified buyback tranche, providing flexibility to optimize buyback decisions.
Dangote Cement grew turnover by 17% from N1.38 trillion in 2021 to N1.62 trillion in 2022 while gross profit also witnessed substantial growth, rising from N832.62 billion in 2021 to N955.43 billion in 2022.
However, the company faced upward pressure on operating expenses and finance costs, with administrative expenses and selling and distribution expenses seeing notable spikes. Despite this, Dangote Cement maintained a healthy operating profit of N585.88 billion in 2022, slightly higher than the N582.49 billion recorded in 2021.
Finance costs doubled in 2022 compared to the previous year, leading to a moderate decline in pre-tax profit from N538.37 billion in 2021 to N524 billion in 2022.
Nevertheless, the group’s net profit registered a positive growth of 5.0%, increasing from N364 billion in 2021 to N382 billion in 2022. Consequently, earnings per share improved to N22.27 in 2022 from N21.34 in 2021.
With the successful completion of the first tranche of the share buyback program, market analysts are keenly observing Dangote Cement’s future strategic moves to maximize shareholder value and bolster its market position in the cement industry.
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