Displaying items by tag: Dangote Cement

Kenya: ARM Cement has signed a deal to sell its business in Kenya to the National Cement Company for US$50m. The transaction is subject to customary regulatory approvals, according to the Business Standard newspaper. ARM Cement also has operations in Tanzania, Rwanda and some interests, in the form of unexploited mineral deposits, in South Africa.

“This transaction is in line with National Cement’s growth strategy in Kenya to position itself as the leading cement manufacturer in the region. The industry is poised for growth and we are excited about the prospects for this next chapter of our business. We will endeavor to safeguard the interests of all stakeholders including the employees, customers, and suppliers in the overall interest of Kenya,” said Narendra Raval, chairman of National Cement.

The cement producer was placed under administration in August 2018. In late 2018 Oman’s Raysut Cement said it planned to buy ARM Cement as part of its expansion plans. Nigeria’s Dangote Cement was also linked to a potential purchase of the company.

Nigeria: Dangote Cement’s earnings have fallen due to elections and price cuts in Nigeria and competition in the rest of Sub-Saharan Africa. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 11.2% year-on-year to US$312m in the first quarter of 2019 from US$351m in the same period in 2018. Sales revenue fell slightly to US$670m, due to declines in Nigeria. Cement sales volumes grew slightly to 3.99Mt in Nigeria and by 4.8% to 2.35Mt in the rest of Africa. Despite this Dangote Cement noted that its sales volumes in Nigeria were its third-highest quarterly volume ever.

“It was a challenging quarter with delays to the Nigerian elections that impacted sales, increased discounting in Nigeria and tougher market conditions in South Africa and other Pan-African markets. In addition, our variable costs were hit by foreign exchange effects, as well as higher fuel and distribution costs,” said Joe Makoju, group chief executive officer (CEO) of Dangote Cement.

Benin: Aliko Dangote, the chairman of Nigeria’s Dangote Cement, raised the issue his company has with exporting cement to Benin. He said this company could not export cement to Benin despite its Ibese plant in Nigeria being under 30km from the border, according to the Vanguard newspaper. He alleged that the country was importing ‘more expensive’ cement from China instead.

Dangote made the comments in an interview with Mo Ibrahim at the 2019 Ibrahim Governance Weekend in Abidjan, Ivory Coast. He also said that he looked forward to the Continental Free Trade Area (CFTA) making trade easier in the region.

Ivory Coast: Dangote Cement is building a 3Mt/yr cement plant with two production lines from an investment of around US$260m in the Ivory Coast. In an audience with Souleymane Diarrassouba, Minister of Commerce, Industry and Promotion of SMEs, the company said that the project is 70% complete, according to the Agence Ivoirienne de Presse. The new plant will create 800 jobs. It is scheduled to start production in early 2020.

All the major multinational cement producers reported growing sales in 2018. Yet, the big growth was found outside of Europe, with China Resources Cement (CRC), Ultratech Cement and Dangote Cement all posting sales revenue growth of above 10%. Similarly, cement sales volumes continued to rise. CRC and Ultratech Cement were the standouts here, with the latter benefitting from its acquisitions including, most recently, Binani Cement. Concrete sales volumes were the same, rising for all the companies with the exception of Buzzi Unicem. It suffered market issues in Italy and Germany.

Graph 1: Sales revenue from selected multinational cement producers in 2017 and 2018 (Euro billions). Source: Company financial reports.

Graph 2: Cement sales volumes from selected multinational cement producers in 2017 and 2018 (Mt). Source: Company financial reports.

Graph 3: Ready-mixed concrete sales volumes from selected multinational concrete producers in 2017 and 2018 (Mm³). Source: Company financial reports.

With the major Chinese producers, including CNBM and Anhui Conch, yet to release their annual results for 2018, CRC is included in this roundup to give an idea of how that market is performing. Both CNBM and Anhui Conch have released profit alerts anticipating bumper results in 2018 though. This is likely due to boosted local cement prices.

The major story for the European-based producers was one of asset sales and debt reduction. LafargeHolcim returned to positive income in 2018 with a focus on its Strategy 2022 programme. HeidelbergCement’s earnings were hit by poor weather in the US and insufficient divestments. Cemex, although based in Mexico, retains a significant European presence and so it included here. It suffered from poor sales outside of its base in Mexico and the US. CRH continued on its trajectory as the world’s biggest building materials company with solid sales and earnings growth. Interestingly though given its expansion strategy in recent years CRH’s debt to earnings before interest, taxation, depreciation and amortisation (EBTIDA) ratio remains better than the other three majors above, even after its purchase of Ash Grove Cement in mid-2018 taken into account. Although other financial comparisons are worth considering, such as EBITDA margin.

Despite Cemex’s relatively high net debt compared to its peers it has been cutting its debt the fastest, at 8% to US$10.4bn in 2018. Its current plan is to reach an ‘investment-grade’ balance sheet by 2020. LafargeHolcim and HeidelbergCement are in ‘cuts’ mode leading to all sorts of speculation about where they might sell next. The wilder rumours in the press include preparations by LafargeHolcim to sell its entire operation in the Middle East and Africa. Similar tales about a sale in the Philippines are more credible but remain unconfirmed. HeidelbergCement is keeping its cards closer to its chest but poor performing territories that might be up for sale include some of its Italian plants and parts of Africa.

Of the larger producers without a European presence, Ultratech Cement has been negatively effected by energy costs during the nine months to the end of 2018 with its income and EBITDA down. Dangote Cement’s performance in 2018 was driven by sales at home in Nigeria although earnings elsewhere continued to grow.

With all of this in mind the scene appears set for a breakout by a major Chinese producer to buy a big bolt-on acquisition or expansion by regional or national players along the lines of that seen by Semen Indonesia or UltraTech Cement. Taiwan Cement has been ahead here with its purchase of a 40% stake in Turkey’s Oyak Cement but what we’re really waiting for is a majority position within a country or territory. At which point CNBM and the like will have earned its place in the 2019 version of this article. Perhaps the age of truly multinational cement producer is coming to an end as regional players become more prominent.

Nigeria: Aliko Dangote, the president of Dangote Cement, says that his company is targeting exports of US$600m/yr to sub-Saharan Africa. He made the comments at the Dangote Cement Distributors’ Award Night in Lagos, according to the Nigerian Guardian newspaper. He added that Dangote Cement will become the largest exporter of cement in the region in 2019. It plans to focus on African countries with limited limestone reserves. The company is building new terminals at Onne and in Lagos. He also expressed hope that congestion at the Port of Apapa would be cleared soon to help the company meet its export targets.

South Africa: Sephaku Cement’s revenue fell by 3.1% year-on-year to US$161m in 2018 from US$167m in 2017. Its net profit dropped by 19% to US$3.3m from US$4.07m. The subsidiary of Nigeria’s Dangote Cement said that the general poor economy in the country led to an estimate 5 – 10% decline in industry sales volumes. It blamed ‘intense’ competition between clinker grinding plants, producers and importers. Its sales volumes of cement fell by 6.4%.

Kenya: ARM Cement has extended its bidding period to mid-march 2019 following requests by potential buyers. Administrator PricewaterhouseCoopers (PwC), which took over the cement producer in August 2018, originally set the deadline to the end of February 2019, according to the Business Daily newspaper. Bidders have asked for a longer period to complete due diligence tests and decide what they think the value of the company is.

14 companies have already made non-binding bids for the cement producer. These will later be shortlisted before a winning bidder is selected. No bidders have publicly been announced but Nigeria’s Dangote Cement and Oman’s Raysut Cement are believed to be interested, according to local media.

Nigeria: Domestic sales growth drove Dangote Cement’s financial results in 2018. Its local cement sales volumes grew by 11.4% year-on-year to 14.2Mt in 2019 from 12.7Mt in 2018. Sales in the rest of Africa remained stable at 9.4Mt. Sales revenue grew by 11.9% to US$1.71bn in Nigeria and by 9.6% to US$784m in the rest of Africa. Overall revenue grew by 11.9% to US$2.49bn from US$2.23bn. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 12.1% to US$1.20bn from US$1.07bn.

“This is a record financial performance by Dangote Cement, driven by a strong increase in our home market, Nigeria, despite heavy rains and uncertainties about the election,” said Joe Makoju, group chief executive officer. He added that, although Pan-African volumes were unchanged in 2018, he was confident that the group would see an increase in 2019, driven by higher volumes in Tanzania, Ethiopia, Congo and Sierra Leone. Elsewhere in Africa the cement producer said that plant shutdowns in Tanzania due to delays to a gas turbine installation, civil unrest in Ethiopia and a reduction of imports from Nigeria to Ghana had reduced its sales.

Nigeria: Dangote Cement has appointed Guillaume Moyen as its chief financial officer (CFO) for operations. He was the CFO of UAE-based OLA Energy from 2014 to early 2019, according to Bloomberg. He will report to group CFO Brian Egan.