Chairman of the Board of Directors of BUA Cement Plc, AbdulSamad Rabiu, has explained how cement dealers frustrated the efforts of the company to sell cement at N3,500 per bag last year.
Rabiu spoke at the 8th Annual General Meeting of BUA Cement held in Abuja.
He had emerged after a visit to President Bola Ahmed Tinubu in November 2023 to tell journalists that Bua Cement would sell at N3,500 per regular bag.
Rabiu explained the failure to live up to the vow.
According to him, the company had sold over a million tons of cement to dealers at a price of N3,500 per bag, intending for these savings to be transferred to the end-users.
However, he noted that the dealers went to sell a bag to consumers for prices ranging from N7,000 to N8,000.
Following this discovery, his company discontinued the policy since it was not meant originally to support dealers financially.
He mentioned that BUA Cement was unable to regulate the dealers who, he claimed, were earning substantial profits due to the high margins, as the company lacked influence over pricing in the open market.
Rabiu explained: “A lot of the dealers took advantage of that policy. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them. Some were selling at N7, 000 and 8 000 per bag. They made a lot of money with the very high margin. I think we had sold more than a million tons at N3,500 before we realised what the dealers were doing.
“And then, because of the issues that Nigeria faced at the time about devaluation of the Naira last year and the removal of fuel subsidy, we could not continue that policy. We wanted that price to stay at that level but dealers refused. So, we could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers.
“I’m referring to the point when the foreign exchange rate moved from about N600 to maybe N1,800 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price policy,” Rabiu said.
Meanwhile, Rabiu, at the 8th AGM of BUA Cement Plc, disclosed that the company recorded revenue growth of 27.4 per cent in 2023 but that profit after tax declined by 31.2 per cent due to foreign exchange losses.
The BUA Cement Chairman announced that the company saw an increase in net revenue of N460 billion within the period from N361 billion in 2022. According to Rabiu, the company also improved its capacity utilisation to 61.2 per cent in 2023 from 59.8 per cent in 2022, due to an increase in cement volumes dispatched.
He said that the increase in volumes dispatched also resulted in an increase in market share.
