Dangote Cement revenue rises 29.4%

Dangote Cement, Nigeria’s largest cement company saw revenues rise 29.4 per cent last year to nearly NGN386.2bn (US$2.45bn), backed by 28.2 per cent growth in domestic volumes.

In Nigeria, revenue from cement operations (including haulage revenue) rose by 30.1 per cent YoY to nearly NGN371.6bn. Dangote Cement Ghana Ltd contributed revenue of NGN14.1bn in 2013, an increase of nearly 15.2 per cent on 2012.

At group level, gross profits rose by 35.3 per cent to NGN243.7bn. Consolidated gross margins improved from 60.4 per cent in 2012 to 63.1 per cent in 2013, largely as a result of an improved gas supply in Nigeria and a proportionally smaller contribution of Gboko, which is entirely fuelled by LPFO. However, these savings were to some extent offset by higher staff costs associated with new capacity.

Group operating profit rose by 33.7 per cent to NGN195.9bn, at a margin of 50.7 per cent. For Nigerian operations the increase in operating margin was more pronounced, rising from 51.9 per cent to 54.1 per cent, which generated NGN201.1bn in operating profit (2012: NGN148.1bn). Losses in Dangote's West African operations totaled NGNG5.9bn, of which NGN4.5bn relates to one-off costs. A further NGN1.2bn of West African losses were incurred in Ghana.

Domestic performance
Overall Nigerian cement market volumes were up by 15.6 per cent to 21.1Mt. Dangote’s sales exceeded this rise as the group achieved a 28.2 per cent increase in sales volumes to 13.3Mt for the year. “As the Nigerian cement market grew by a strong 15.6 per cent, we managed even better growth,” Chief Executive Officer Devakumar Edwin said in the statement. “We increased our margins despite continuing disruption to our gas supply, “ he added.

The flagship Obajana works in Kogi state, which has a capacity of 10.25Mta, increased cement sales by 37.2 per cent to nearly 7.9Mt in 2013. The Ibese works sold 4Mt of cement during 2013, up 40.4 per cent on the 2.85Mt sold in 2012, its year of commissioning. Meanwhile the Gboko plant was reopened at the end of January 2013 following a temporary closure during the month before on the back of excessive imports. The plant sold 1.4Mt of cement in 2013, down 13.1 per cent, reflecting in part the mothballing and recommissioning times.  In the second half of 2013, Dangote commissioned extra capacity at Gboko through the introduction of higher-capacity grinding mills and debottlenecking of the plant, taking total plant capacity to 4Mta.

Dangote Cement is now looking at ways to diversify its fuel supplies to mitigate the impact of any future disruption and reduce the cost of using alternative fuels to gas. Ibese saw excellent gas supplies with an average of 98 per cent but continuing fuel disruption have been witnessed at Obajana in 1Q14. The company is now shifting its focus to coal as the with its first consignment scheduled to arrive in early May. Coal grinding plants are also being readied for Line 3 of the Obajana works and Lines 1 + 2 at Ibese.

The company currently has a production capacity of 20.25Mta across three Nigerian plants and new operations beginning to come onstream across the rest of sub-Saharan Africa. The group plans to have around 60Mta of production, grinding and import capacity in the region by 2016.