Dangote Cement ,Africa’s largest cement producer, has announced its unaudited results for the six months ended 30th June 2017, posting a 12.6 percent increase in sales volume across Africa.
In the financials released on the floor of the Nigerian Stock Exchange indicated that the increase in sales volume showed a growing capture of Pan-African market as Dangote Cement continues to gain grounds.
Revenues from operations in Nigeria increased by 34.5 percent to ?291.4 billion while Pan-Africa revenue increased by 63.7 percent to ?124.4B from ?76.0B mainly as a result of increased volumes and foreign exchange gains when converting the sales from country local currency into Naira.
Analysis of the half year result revealed that sales volumes of African operations increased by 12.6 percent to 4.7 million metric tons with Sierra Leone making a 53 kt maiden contribution.
Record of sales from its operations scattered around the African continent revealed that a total of 1.1million ‘metric tons of cement was sold in Ethiopia, almost 0.7 million metric tons sold in Senegal, 0.6 million metric tons sold in Cameroon, and 0.5 million tons in Ghana.
Also, 0.4 million metric tons of cement was sold in Tanzania and 0.3 million tons in Zambia. Sales volumes from Nigerian operations fell from 8.8Mt to 6.9Mt, occasioned by the onset of rains which stalled many construction projects.
Reflecting on the half year results, Dangote Cement’s Chief Executive Officer, Onne van der Weijde expressed satisfaction that the company’s revenues have continued to grow despite low sales from the Nigerian operations noting that the revenues grew on the strength of sales from other African operations
Said he: “Our revenues have continued to grow despite the lower volumes seen in Nigeria, especially because of the recent heavy rains. Our margins have improved significantly, helped by improved efficiencies and a much better fuel mix in Nigeria.
“We are using much more gas and increasing our use of coal mined in Nigeria, thus reducing our need for foreign currency and supporting Nigerian jobs.
”Our Pan-African operations are growing well and increasing market share. We saw our the first sales from Sierra Leone in the first quarter and our new plant in the Republic of Congo will be in production at the end of July, further increasing our footprint across Africa and strengthening our position as its leading manufacturer of cement.”
The Company reports that it estimated that Nigeria’s total market for cement was 10.2 million tonnes (Mt), 23.2% lower than the estimated 13.3Mt sold in Nigeria in the first half of 2016. Of total market sales in the first half of 2017, just 0.1Mt was imported.
“As a result of the slower market, our Nigeria operation sold nearly 6.9Mt of cement, down 21.8% on the 8.8Mt sold in the first half of 2016. We estimate our market share to have been about 64.5% during the first six months of 2017.
Dangote Cement is a high-growth, low-debt, internationally diversified company that has just paid a dividend amounting to nearly 75% of 2016 net profits to shareholders. “The recent publication of our credit ratings highlights the financial strength we have achieved through our unwavering focus on the profitable expansion of the business, underpinned by our belief that we must remain prudent in our financial management.”, Mr. Weijde stated.
Dangote Cement Plc, controlled by Africa’s richest man, Aliko Dangote, said it may shut its operations in Ethiopia if authorities in the central state of Oromia don’t reverse an order to cement makers to hand over control of some parts of their businesses to local young people.
Oromia state’s East Shewa Zone administration wants the Nigerian company to outsource its pumice, sand and clay mines to youth groups or be responsible for “any problems” that may arise, according to a letter from
the authority to Dangote that was seen by Bloomberg and verified with a representative of East Shewa’s administration. The regional government sees the transfer of jobs in pumice production as a way to ease youth unemployment and quell unrest, according to the document.
Any mismanagement of mining infrastructure including buildings and excavators could “lead to total breakdown of our business,” Dangote Executive Director Edwin Devakumar said in an interview at the company’s headquarters in Lagos, Nigeria’s commercial hub, last week. The cement maker will write to the federal government this week to ask it to intervene and will consider shutting the plant in Mugher, about 90 kilometers (56 miles) north of Addis Ababa, as a “last option” if this fails, he said. The company listed Ethiopia as one of its three “key” markets, along with Nigeria and South Africa, in a presentation in May.
There’s “no intention to displace any investment,” so long as Dangote is “working by the laws and regulations in our region and country,” Tekele Uma, head of Oromia’s transport authority, said by phone. “If anyone’s complaining about Oromia regional state, we’re ready to talk with them. Any investment can come. Any investment can go.”
Motuma Mekassa, Ethiopia’s minister of mining, petroleum and natural gas, said by phone he wasn’t aware of an attempt by Dangote to reach his office. An official at the federal ministry said Dangote should make an approach through “appropriate channels,” as opposed to through the media, asking for his name to be withheld, citing the sensitivity of the issue.
The Ethiopian government is searching for ways to reduce youth unemployment after violent protests by Oromo communities over alleged land dispossession, political marginalization and repression led the government to declare a state of emergency last year. Dangote Cement was among several businesses attacked during the unrest. The protests triggered a 20 percent slump in foreign investment to $1.2 billion in the six months through December compared with the same period a year earlier, according to the government.
Foreign Investment in Ethiopia Slumps After Business Attacks
The order to outsource mining is “a violation of our rights because the government has given us a mining license,’’ said Devakumar, who was Dangote Cement’s chief executive officer until 2015. “If I don’t have limestone and additives my cement plant is useless.”
Although the disputes haven’t forced Nigeria’s biggest listed company to halt production, it will miss targets if the impasse isn’t broken, the executive director said. Disruption in pumice flows will reduce output and trigger job cuts, Devakumar said. Dangote employs about 1,500 workers directly in the country, while an estimated 15,000 people earn a living indirectly through the firm’s cement and mining facilities, he said.
The disagreement is also hampering Dangote’s Ethiopian expansion plans. The company has stopped an advance payment on a contract to double production capacity of the 2.5 million metric-ton per year plant after signing an agreement, Devakumar said.
The company has spent more than $700 million in the country and is “discouraged from investing more,” he said. Ethiopia’s government said in February it’s only likely to attract $3.2 billion of foreign direct investment this year, compared with a target of $3.5 billion.
Dangote Cement, which has a market value of $11.1 billion, has expanded rapidly across Africa since 2014 and now operates in 9 countries aside from Nigeria. The shares were little changed in Lagos on Thursday.
Aliko Dangote is now a coal miner as Tanzania has offered his Dangote Cement Company in the southeastern town of Mtwara, land to mine coal for its operations.
Tanzania’s Ministry of Energy and Minerals at the weekend handed a 10-square-kilometre plot of land to the $500 million cement factory set up in 2015 by Aliko Dangote, Africa’s richest man. The factory has an annual capacity of 3 million tonnes.
According to NAN and local media The Citizen, the coal concession was sanctioned by President John Magufuli to allow the company get a reliable supply of coal to fuel its activities.
Tanzania has banned the importation of coal from South Africa and Tancoal, the only one coal producing company in the country, cannot meet the entire market demand. Dangote runs on expensive diesel generators and requested Tanzanian government support last year to supply natural gas at a reduced price.
President Magufuli later intervened after a meeting with Nigerian billionaire and the company’s owner Aliko Dangote over stalled negotiations on prices.
He blamed middlemen for the delay in supply plans and said Dangote “will now buy natural gas directly from the state-run TPDC (Tanzania Petroleum Development Corporation)”. Dangote, Africa’s biggest cement producer, is seeking to double Tanzania’s annual output of cement to 6 million tonnes. It plans to roll out plants across Africa.