Displaying items by tag: Dangote Cement
SOCOCIM aims at 56% market share in Senegal
06 September 2017Senegal: Youga Sow, the director general of SOCOCIM Industries, says that his company is aiming for a market share of above 56%. He made the comments at a local festival, according to local press. Sow added that the country produced 3.2Mt of cement in 2016 despite having a production capacity of 8Mt/yr. The other major cement producers include Ciments du Sahel and Dangote Cement.
Dangote talks up investments in Europe and North America
18 August 2017Nigeria: Aliko Dangote, chief executive officer (CEO) of Dangote Group and Dangote Cement, plans to invest an incredible US$20 - 50bn in the US and Europe by 2025, in industries including renewable energy and petrochemicals. Speaking in a wide-ranging interview with Bloomberg, Dangote said that the group’s cement activities account for 80% of Dangote’s overall wealth. The new investments would more likely come in renewable energy and agriculture, rather than cement, with an aim to conduct 60% of all investments outside of Africa by 2020.
Dangote Retailers Bonanza proves popular
15 August 2017Nigeria: Over the weekend of 12-13 August 2017 Dangote Cement gave out prizes totalling US$1.3m to its distributors and customers in its on-going Dangote Retailers Bonanza – Season 2. 10 ‘Star Winner’ retailers from the company's West region claimed their prizes. Some went home with 1200 bags of cement and a 40ft container and others won 600 bags and a 20ft container.
The process of awarding the prizes involved moving cement directly to traders, which, according to Dangote Cement, had the desired effect of raising interest among other cement traders.
Funmi Sanni, the West Regional Sales Director, said the decision to take the products to the retailers in their respective place of trade was to prove that the bonanza was real. She explained that the management designed the bonanza to reward its loyal retailers and help them shore up their businesses, saying this is why it has also included containers in the winning package.
Brian Egan appointed to board of Dangote Cement
09 August 2017Nigeria: Brian Egan has been appointed as an executive director to the board of Dangote Cement. Currently the company’s Chief Financial Officer, he has worked for the cement producer since 2014. Previous to this he worked as the executive director and chief financial officer of Petropavlovsk and of Aricom. He has also held senior finance positions at Gloria Jeans Corporation, Georgia – Pacific Ireland and Coca-Cola HBC-Russia. He trained with KPMG and is a member of the Institute of Chartered Accountants in Ireland.
Dangote targeting 1Mt of Zambian sales in 2017
08 August 2017Zambia: Dangote Industries Limited says it will continue to penetrate the Zambian cement industry and is targeting 1Mt of sales by the end of 2017. This follows record sales of 0.3Mt of cement during the first six months of 2017.
Country CEO Desmond Maharaj said that Dangote would look to spread its influence in more Zambian provinces going forward. He added that export markets such as Malawi, Democratic Republic of Congo and the great lakes region were also attractive, hence leading to the company to produce more cement from its Zambian operations.
Half year multinational cement producer roundup
02 August 2017Cement sales volumes are down at the larger multinational cement producers so far in 2017. As the first half-year results emerge, a picture seems to be appearing of sluggish growth at best for the major internationals. Reduced working days and poor weather have been blamed for the underwhelming performance.
Graph 1: Cement sales volumes for selected multinational cement producers during the first half of 2017. Source: Company financial reports.
True, LafargeHolcim’s sales rose by 0.4% year-on-year on a like-for-like basis, probably due to the assets the group has been sloughing off since the merger, but this is hardly the dynamic growth shareholders may have hoped for. Meanwhile, HeidelbergCement, following its acquisition of Italcementi in late 2016, has only been able to increase its cement and clinker sales by 1% for the first half of 2017 once consolidation effects were excluded. Here the problem appears to be reduced sales in both the US and Indonesia at the same time. This then leaves Cemex with a 2% drop in sales volumes to 33.9Mt with a big drop in the US despite a promising construction market otherwise. It blamed the decline on a high comparison base in 2016 and the weather.
The larger regional players examined here appear to have fared better. Both UltraTech Cement in India and Dangote in sub-Saharan Africa reported flat or falling sales volumes. However, delve a little deeper and there’s more going on. UltraTech didn’t offer any reason for the decline although it was likely focused on its acquisition of assets from Jaiprakash Associates and the knock-on from the demonetisation process last year. That purchase increased its cement production capacity by nearly 40% to 91.4Mt/yr from 66.3Mt/yr and it seems keen, to investors at least, that it will be able to rocket up the capacity utilisation rate at the new plants.
Dangote meanwhile has taken a blow from the poor economic situation in Nigeria, where it still produces most of its cement. Here, sales fell by 21.8% to 6.86Mt from 8.77Mt, causing its overall sales to fall by 11.3% to 11.5Mt. Almost incredibly though, as Graph 2 shows, Dangote upped its sales revenue by a whopping 41.2% to US$1.13bn off the back of improved efficiencies and a much better fuel mix in Nigeria. The turnaround is impressive considering the pressure the company faced in 2016. Today’s news that the firm has sold a 2.3% stake to foreign investors adds to the impression of a company on the move.
Graph 2: Sales revenue for selected multinational cement producers during the first half of 2017. Source: Company financial reports.
Looking at overall sales revenue shows a happier picture for most of the producers detailed here, with the exception of HeidelbergCement. Although Graph 2 shows declines for LafargeHolcim and Cemex on a like-for-like basis, at least growth is occurring. HeidelbergCement though has reported static revenue on an adjusted basis for the period. This suggests that the producer has hit problems just as it is starting to integrate the Italcementi assets into its portfolio. In theory the geographic spread of its new production units should shield it from lowered growth elsewhere but if this doesn’t happen it may be in for a rougher ride than LafargeHolcim following its merger.
In summary, being a large-scale multinational cement producer doesn’t quite seem to be offering the balanced growth one might expect so far in 2017. Cement sales volumes are slipping and revenue is also down on a direct comparison basis. It’s barely a case for comparison but smaller regionally based producers like UltraTech Cement and Dangote, in the right locations, seem to be capitalising on their positions. We’ll see how the big Brazilian producers Votorantim and InterCement, Buzzi Unicem and CRH fit this trend when they release their financial results over the next few weeks.
Nigeria: Dangote Cement’s sales revenue and operating profit have risen in the first half of 2017 despite a significant drop in sales volumes in Nigeria due to the poor state of the economy. Its sales revenue rose by 41.2% year-on-year to US$1.31bn in the first half of 2017 from US$928m in the same period in 2016 with increased revenue in both Nigeria and the rest of Africa. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 53.7% to US$647m from US$421m. It attributed the rising revenue to improved margins from better efficiencies and a better fuel mix in Nigeria.
“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,” said chief executive officer (CEO) Onne van der Weijde. He added that the group had seen its first sales from Sierra Leone in the first quarter and that its new plant in the Republic of Congo will be in production at the end of July 2017.
Ethiopia: Dangote Cement has threatened to stop its operations at its Mugher cement plant in Oromia if the local government doesn’t cancel an order forcing the cement producer to give control of some of its business to local young people. Oromia state's East Shewa Zone administration has asked the Nigerian cement company to allow cooperatives of unemployed young adults to run part of its mining businesses or face ‘any problems’ that may arise, according to the Star newspaper. The state scheme is intended to reduce youth unemployment and to relax local social tensions following riots in 2016. Dangote Cement was one of several businesses that were attacked in the unrest.
However, Dangote Cement’s executive director Edwin Devakumar warned that any ‘mismanagement’ of its mining business could undermine its entire business. The cement producer intends to write to the federal government to ask for intervention otherwise it will consider shutting its Mugher plant as a last resort.
Nigeria: Dangote Cement has signed an agreement with China Sinoma International Engineering for it to build a 6000t/day cement plant for US$249m. The scope of supply for the integrated production line includes the quarry, cement grinding, equipment procurement and supply, civil construction, mechanical and electrical equipment installation, commissioning and personnel training, according to Reuters. Once the final contract is signed and started the project is forecast to take 27 months to produce cement and 30 months to complete performance testing.
Republic of Congo: Nigeria’s Dangote says it will deliver the first batch of 42.5 R grade cement from its new US$350m cement plant at Mfila near Brazzaville in July 2017. The plant was completed in May 2017 and it is currently undergoing test runs, according to the Vanguard newspaper. The 1.5Mt/yr plant will join others run by CIMAF, Sonocc and Forspal in the country.