Dangote post record growth ahead of Nigerian listing

Dangote post record growth ahead of Nigerian listing
Published: 23 October 2010

Nigeria’s Dangote Cement Plc posted a turnover of NGN146.56bn (US$965m) and a profit of NGN76.93bn for the third quarter ended 30 September 2010.

The Lagos-based company’s unaudited results for the first nine months of the year showed an increase in turnover by NGN55.26bn from the NGN91.30bn posted in the equivalent period in 2009. Profit before tax rose from NGN46.93bn to NGN76.93bn while profit after tax experienced a similar climb to NGN75.30bn.

Cement sales rose in terms of volumes to 5.75Mt, 35.5% higher than sold in the first nine months of 2009, and on the back of increased output at 5.2Mta Obajana and Gboko cement plants. 

The results include the merger with Benue Cement Company, through which Dangote became Africa’s largest producer of cement in terms of capacity, surpassing South Africa’s Pretoria Portland Cement Co. The aim of the merger is to improve the access to finance for Dangote’s cement operations, consolidate supply and distribution chains, reduce costs and boost cement production.

Dangote Cement plans to sell a 20% stake through a global share offering over the next 18 months, as it gears up for an expected construction boom in Africa. On 26 October the company will initially offer NGN13.5bn (US$90m) worth of shares through the Nigerian Stock Exchange in Lagos, instantly adding nearly a third to the market capitalisation of companies listed on the exchange.

The company, which is currently valued at around US$14bn, has been given two years to sell down a 20% stake in the new-listed entity to comply with the minimum 25% free-float requirement.

The future for cement in Nigeria and the rest of Africa certainly looks positive.

The Cement Manufacturers’ Association of Nigeria expects output to rise to 20Mt by 2012, nearly doubling this year’s figure and turning the country from a net importer to a net exporter.

Moreover, Dangote’s Chief Operating Officer, Kunle Alake, said the planned privatisation of the power sector and the anticipated infrastructure development would result in cement demand rising sharply, supporting this boom in production, which include the doubling of capacity in the Obajana works next year. "

Per capita consumption of cement in Nigeria is about 90kg. The average in developed countries is 450kg. We are very far away from that. If we go ahead with these reforms, infrastructure development, the power issue is resolved, I think we should get close to 200-250kg," he said.

Further afield, the company is setting up cement plants and import terminals in several other African countries, including Cameroon, Ethiopia, Ghana, Ivory Coast, Senegal and Zambia. “We’re in South Africa, Zambia, Senegal, Ethiopia, Sierra Leone; we already have terminals in Ghana and we plan to have a grinding mill in Cameroon,” Alake said.  In addition, Dangote intends to build a works in the Republic of Congo. The company targets a production capacity of 46.2Mta in the region, two-thirds of it from its Nigerian base, to be realised by 2015.