See How Dangote Cement Shows Strategic Acumen in Tranche I Share Buy-Back Success

Dangote Cement Plc has successfully concluded the initial phase of its share buy-back program, conducted over a two-day period from July 17th to 18th, 2023. 

According to the official disclosure signed by the Head of Investor Relations, Temilade Aduroja, the total number of shares repurchased during this phase amounted to 121,404,714. This figure corresponds to 0.71% of the company’s issued and fully paid ordinary shares.

After being repurchased at an average price of N339, the shares held a collective value of N41.15 billion.

With the successful conclusion of Tranche I, Dangote Cement Plc now has a total of 16,752,154,537 issued and fully paid outstanding shares.

The repurchased shares will be kept as treasury shares and may be subject to cancellation in the future. It’s worth noting that the implementation of Tranche I did not have any significant impact on the Company’s financial position.

Dangote cement’s backstory

Earlier, Dangote Cement Plc initiated its Tranche I share buyback program involving 168,735,593 fully paid-up ordinary shares of 50 Kobo each, which accounted for 1% of the total current issued shares to be repurchased.

The plan was to buy back these shares from the open market, with the purchase process set to occur on the NGX (Nigerian Exchange) throughout the duration of the program.

What the program entails

Through a share repurchase, a business decreases its total assets, resulting in an enhancement of key metrics such as return on assets and return on equity when compared to not engaging in share buybacks.

By reducing the number of outstanding shares, earnings per share (EPS) can experience accelerated growth as revenue and cash flow expand.

The share buyback is aimed at bolstering long-term shareholder value. Additionally, this strategic move is expected to reinforce the cement manufacturer’s ongoing efforts to optimize its capital structure and balance sheet.

By repurchasing shares and improving the efficiency of financing and balance sheets, the company anticipates a reduction in the cost of capital, ultimately leading to an enhancement of investors’ overall value.

What you should know

On the strength of a favorable response to its Tranche I shares buyback program, Dangote Cement Plc achieved the status of being the most capitalized stock on NGX.

During the trading session on Thursday, July 20th, 2023, the share price of this cement giant remained stable, closing at N352 per share, resulting in an impressive market capitalization of N5.99 trillion.

According to its audited financial statement for the year ending on December 31, 2022, Dangote Cement reported a profit of N382 billion, marking a notable increase from N364 billion in the previous year.

Furthermore, the company’s revenue for the same period displayed significant growth, rising by 16.9% to reach N1.618 trillion, compared to N1.384 trillion in the previous year.

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