Dangote Cement full-year boosted by new African plants

Dangote Cement full-year boosted by new African plants
Published: 02 March 2016


Dangote Cement posted a 25.6 per cent rise in 2015 revenues to NGN491.7bn (US$2.47bn) as new plants performed strongly across Africa, the company reported yesterday.

New production facilities opened by the group in Senegal, Cameroon, Ethiopia and Zambia made their first contributions to the business in 2015 and as a result, volumes rose by 35 per cent to 18.9Mt. “New factories performed very successfully across Africa, gaining significant market share against long-established incumbents,” Chief Executive Officer, Onne van der Weijde, said in the statement.

EBITDA was up by 17.5 per cent to NGN262.4bn. Group operating profit rose by 11.1 per cent to NGN207.8B, helped by contributions from the new plants, all of which were profitable in 2015, the company highlighted.

Nigeria

In its home market, Dangote Cement faced significant challenges from a falling oil price, the devaluation of the naira, the delay to the General Election and a shortage of diesel fuel in April. However, sales volumes rebounded after the September price cut and reached a record for the company in December, Dangote said in the presentation. Full-year volumes were up 3.2 per cent to 13.3Mt. The company’s Ibese plant increased volumes by 29 per cent to 5Mt, while the Obajana works saw a 7.4 per cent rise to 8Mt.

Cement imports into Nigeria fell off rapidly during the fourth quarter and the company increased its market share from about 56 per cent in January to nearly 68 per cent in December and almost 62 per cent across the year as a whole.

In February 2016 Dangote announced plans to establish a new 3.0Mta factory in Okpella, Edo State. This will be in addition to the 6.0Mta plant we will build in Itori, Ogun State.

West and central Africa

West and central Africa group region volumes were 2.137Mt versus 309,000t. Senegal was a stand-out performer for Dangote in the region in 2015. "After a slow but steady start in the first quarter of 2015, sales increased and the plant was quickly running at very high utilisation," the company said. Approximately 90 per cent of its sales are within Senegal, although there is good potential for export to Mali, it noted.

There was also a solid start in Cameroon where the company achieved a market share of 21 per cent in its first year. Ghana sales more than doubled on favourable foreign exchange for imports. The company also began importing small quantities from Nigeria.

In terms of expansion in the region, in Senegal, Dangote announced in September 2015 its intention to build a second line at the factory in Pout with the intention of producing clinker for export, mainly into Mali, where it will establish a grinding facility. 

Now that Sierra Leone has been declared free of the Ebola virus, Dangote is completing the construction of an import and bagging plant in Freetown with a view to starting commercial operations in the second quarter of 2016. Ebola has delayed plans in Liberia, but Dangote now expects to open a 0.5Mta grinding plant there in 2017.

The 1.5Mta plant in Mfila, Republic of Congo, is well on track to open in 2H16. Plans also remain on course for what will now be a 3Mta grinding plant in Côte d’Ivoire, although operations are likely to begin in late 2017. The plant will be located at Abidjan, and land has already been procured and cleared for the factory.

Dangote also plans a 1.5Mta grinding plant in Mali, which it will supply with clinker from Senegal, as well as a 1.5Mta integrated plant in Niger. Both should commence operations in 2018.

South and east Africa

The South and east Africa group region encompasses operations in South Africa, as well as new plants in Ethiopia, Zambia and at the end of the year, in Tanzania. For full-year 2015, cement volumes in South and east Africa rose by 340 per cent to nearly 3.5Mt with profitable maiden contributions from the new factories.

Revenues for the region increased by 340 per cent to NGN61.2bn, compared with NGN13.9bn in 2014, when just its South African works were operational. The region’s contribution represents approximately 12 per cent of the group’s total revenues for 2015. The 3Mta plant in Tanzania began production of clinker in late December and therefore made no contribution to revenues during 2015. Sales were slated to begin in February of this year.

Expansions in this group region include doubling of the Mugher plant in Ethiopia to 5Mta and plans to increase the group's presence in Zambia, either through a second line at Ndola or a new facility near Lusaka. Entry into Zimbabwe has also been announced, while in Kenya Dangote is finalising plans for 3Mta of capacity across two sites.

Capacity target

By mid-2019 Dangote plans to have at least 74Mta of capacity. In September 2015 the company also announced plans to venture beyond Africa for the first time and build a plant in Nepal to serve local and export markets.