Dangote Cement announced its unaudited results for the six months ended 30 June 2016. The company saw its revenue grow by 20.6 per cent to NGN292.2bn (US$925m) but lower selling prices, higher fuel costs and the impact of Pan-African plants in ramp-up phase saw its EBITDA down 10.2 per cent to NGN132.5bn. The EBITDA margin reached 45.4 per cent. Net debt stood at NGN293.3bn, giving a net gearing of 43.1 per cent.
Safeguarding energy security
In terms of production costs, while most production costs increased in line with a higher output, in Nigeria the limited availability of gas has resulted in the increased use of LPFO. Therefore, energy costs rose considerably from NGN27.655bn in 1H15 to NGN51.174bn in 1H16. To hedge against further difficulties in ensuring a sufficient gas supply, the cement producer is preparing to bring additional coal mills online.
Dangote invested around NGN54.6bn in project and regular capex, which represented about half of investment funds of NGN109.8bn in 1H15. Capex was mainly centred on improving its energy efficiency in Nigeria, where NGN16.74bn was invested, and plants under construction in other parts of Africa. The Republic of Congo saw the largest investment outside Nigeria as NGN16.692bn was earmarked for the central African country, followed by funds allocated to Ethiopia (NGN6.165bn) and Sierra Leone (NGN4.101bn). Zambian and Tanzanian operations benefited from investments of NGN3.901bn and NGN2.516bn, respectively.