Abdul Samad Rabiu
Dealers Thwarted BUA’s N3,500/Bag Cement Policy, Chairman Laments
BUA Cement Chairman, AbdulSamad Rabiu, expressed frustration over the company’s attempt last year to offer cement at N3,500 per bag, a policy undermined by cement dealers. Speaking at the company’s 8th Annual General Meeting in Abuja, Rabiu revealed that despite selling over a million tons of cement to dealers at N3,500 per bag with the hope that the lower prices would benefit end-users, the dealers instead sold the cement to consumers at inflated prices of N7,000 to N8,000 per bag.
Rabiu explained that BUA Cement had to abandon the pricing policy, as the intention was not to subsidize dealers who were making substantial profits from the high margins. He noted that the company had no control over market prices, which allowed dealers to exploit the situation. Additionally, he cited the Naira devaluation and the removal of the fuel subsidy as factors that made the policy unsustainable.
Rabiu stated, “Many dealers took advantage of the policy, selling at double the price we offered. After selling more than a million tons at N3,500, we realized what was happening. However, due to the devaluation of the Naira and the fuel subsidy removal, we could not maintain that pricing policy.”
Despite these challenges, Rabiu assured that BUA Cement has been working to prevent prices from escalating in line with the percentage increase in Naira devaluation. He noted that although the exchange rate has significantly changed, cement prices today are relatively lower than they could have been, given the economic circumstances.
Rabiu also highlighted the impact of dollar-denominated costs on their operations, particularly energy expenses. He pointed out that one of BUA’s plants now faces monthly invoices of N15 billion to N16 billion, compared to N3 billion to N4 billion previously.
The company’s financial report showed strong revenue growth of 27.4%, reaching N460 billion in 2023, up from N361 billion in 2022. However, the devaluation of the Naira, rising inflation, and increased production costs pushed the total cost up by 39.5% to N276 billion. Despite these challenges, BUA Cement reported a net profit after tax of N69.5 billion and declared a dividend of N2 per share.
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