Displaying items by tag: Dangote Cement

Nigeria: Dangote Cement’s revenue grew by 35.5% year-on-year to US$874m in the first quarter of 2021 from US$655m in the same period in 2020. Cement sales volumes rose by 18.7% to 7.5Mt from 6.3Mt. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 56% to US$468m from US$300m. Revenue and sales volumes increased fastest in Nigeria but earnings increased faster in the rest of Africa.

“We took the strategic decision to pause our clinker exports to ensure we meet the rapid volume growth in the Nigerian domestic market. We are improving the output of our existing and new assets and aim to recommence clinker exports in the second quarter,” said Michel Puchercos, the company’s chief executive officer. He added that the company had also ramped-up its new 3Mt/yr Obajana Line 5.

For those not following the news in Nigeria, a nationwide row has broken out about the cost of cement in the country. Two of the three main local producers have been forced to publicly defend their pricing. Alongside this, the Senate of Nigeria has implored the federal government to encourage further local investment in cement production with the goal of keeping the end price down.

The current debacle started to take form in the autumn of 2020 when the price of cement leapt up by 35%. Builders and those immediately affected started complaining then but the argument really heated up in April 2021 when the local press started comparing the price of cement in Nigeria unfavourably against neighbouring countries. Dangote Cement, one of Africa’s largest cement producing companies and a Nigerian-based one at that, immediately defended itself by pointing out that its ex-factory price was the same or lower than in other African countries. It added that it could not control the price of cement between its factory and the end-consumer with dealers and middlemen benefiting from the gap. A week later the Senate of Nigeria intervened with its members discussing the issue in relation to a bill intended to liberalise the sector. This week, BUA Cement said publicly that it had no plans to raise the ex-factory price of its cement at the present time or in the future, “…barring any material, unforeseen circumstances.”

The roots of the current crisis go back to the mid-2010s when Nigeria declared itself ‘self-sufficient’ in cement after building up its domestic production capacity. At the same time it discouraged imports and embraced exports. Today, the country’s cement production capacity is around 49Mt/yr and annual demand is around 21Mt. This self-sufficiency path reached one milestone for Dangote Cement in 2020 with clinker exports starting from its Apapa terminal and the commissioning of its Onne Export Terminal in Port Harcourt. Under the old narrative for the sector this was a moment for congratulation. Suddenly though, instead of being seen as the saviour of the industry, members of the legislature were asking whether it was a good thing for Dangote Cement to hold a 60% share of the local market with most of the rest shared between Lafarge Africa and BUA Cement.

The price row has seen Dangote Cement promptly suspend exports from those new terminals. It also said it had reactivated its 4.5Mt/yr Gboko plant in Benue State, which was reportedly mothballed in 2018. It is worth noting here that the Gboko plant was part of that national capacity total above despite being mothballed until fairly recently. Aside from the middleman argument, the producer said that its production costs had risen over the past 15 months due to negative currency effects but that it hadn’t increased its ex-factory prices since December 2019.

A survey by the News Agency of Nigeria in the north-east of the country revealed all sorts of speculation about why the price was so high but few facts. Some of the opinions expressed included: the coronavirus outbreak; low production rates at the plants; market middlemen; and transport costs. What is clearer is that the country’s cement production capacity is more than double that of its demand. On paper at least the nation should be able to satisfy its own needs and then export the same again with plenty spare. Yet somehow this isn’t happening. If the government really believes in self-sufficiency it may be time to take another look at the cement sector, the challenges it faces and the needs of the end consumers.

Nigeria: Dangote Cement says that the price of cement from its plants in Nigeria is the same as from plants in other countries in Africa or cheaper. The cement producer made the announcement in response to local media reports that its prices were allegedly lower in Ghana or Zambia, according to the Vanguard newspaper. It added that it had control over its ex-factory prices but that it could not set the end market price.

Dangote Group Executive Director, Strategy, Portfolio Development and Capital Projects Devakumar Edwin explained that Dangote Cement has a 60% share of the local cement market at present. Demand for cement has risen following the coronavirus pandemic and the company has had to suspend exports from its recently commissioned export terminals in order to meet local demand. He added that it has also reactivated its 4.5Mt/yr Gboko plant in Benue State, which was closed in 2018, to cope with the situation.

Nigeria: Dangote Cement has recorded sales of US$2.52bn in 2020, up by 16% year-on-year from US$2.18bn in 2019. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 21% to US$1.17bn from US$965m. Total cement sales volumes rose by 8% to 25.7Mt from 23.7Mt and Nigerian cement sales rose by 13% to 15.9Mt from 14.1Mt. Highlights for the year included the start of clinker exports from the Apapa terminal and the commissioning of the Onne cement terminal in Nigeria. The group also commissioned a gas power plant in Tanzania.

Chief executive officer Michel Puchercos said, “Despite the impact of the Covid-19 pandemic, 2020 was a record year for Dangote Cement across the board. Several firsts made 2020 a productive year such as our maiden clinker shipment, maiden bond issuance and successful buyback programme. We increased our capacity by 3Mt/yr in Nigeria, commissioned our two export terminals and commissioned our gas power plant in Tanzania. All this was achieved whilst we focused on protecting our people, customers, and communities from the impact of the pandemic.”

Nigeria: Dangote Cement has appointed Guillaume Moyen as its group chief financial officer (CFO).

Moyen joined Dangote Cement in February 2019 as group CFO (operations) and was appointed acting group chief financial officer in March 2019. He is in charge of finance and information technology (IT) and has more than 20 years’ experience in multi-national industrial and services companies notably operating in emerging and frontier markets.

During his career he has worked in finance, risk management, internal control, audit, information technology and procurement working in senior positions in manufacturing, engineering, oil and gas, nuclear energy, mining and consulting sectors notably with the Areva Group, the Ola Energy Group and KPMG. Guillaume is a chartered accountant and holds a Master of Business Administration (MBA) degree from Columbia Business School.

Several of South Africa’s cement and concrete producers joined up in early March 2021 to form an industry association called Cement & Concrete SA (CCSA). The Concrete Institute, Concrete Society of Southern Africa and the Association of Cementitious Material Producers established the organisation to, “take the lead on all matters relating to cement and concrete in South Africa.” Setting up an organisation like this takes time and it fits with the move in recent years of thinking about the whole building materials chain rather than just focusing on one part. The country is also in the first phase of its carbon tax and no doubt producers feel they need to make a renewed effort to fight their corner. Other aspects such as promoting the ‘value creation story’ of the cement and concrete industry in South Africa, research and training also makes sense.

The timing here is compelling due to the ongoing review of anti-dumping measures that were levied by the International Trade Administration Commission of South Africa (ITAC) upon imports by Pakistan-based cement producers. Local media in South Africa reported that ITAC started reviewing the tariffs in December 2020 in a process expected to take up to 18 months in duration. As reported in January 2021 (GCW 489), imports to the country fell after ITAC introduced tariffs in 2015 but they have started to edge up since then, particularly from producers in other countries such as Vietnam and China. Separately, the CCSA may have scored an early victory with the news that its application that government-based infrastructure projects should only use locally-produced cement was working its way through the government.

Looking at the general market, PPC reported ‘muted’ sales of cement in April and May 2020 due to the country’s first coronavirus-related lockdown from late March 2020. Similar to some other countries, construction projects halted and cement plants stopped producing. However, the market bounced back as the restrictions were relaxed with strong sales from June 2020 to September 2020 for the leading producer. It noted that the increase in volumes was mainly due to consumer retail although it noted that government infrastructure cement demand was also starting to be felt. PPC’s cement sales volumes fell by 5 – 10% in South Africa and Botswana from April to June 2020 but then rose by 20 – 25% from July to September 2020. The continuation of this sales momentum was also noted in October and November 2020. Dangote Cement’s operations in the country reported a similar situation, with sales up by 7% year-on-year in the first nine months of 2020 due to a surge in home improvement related demand after the first lockdown ended. Similar to PPC, it reckoned that demand increased by 25 - 30% year-on-year in the third quarter of 2020 as limitations in travel and entertainment led to some people saving money instead.

After the summer sales bounce, producers were soon complaining about rising import levels in the autumn of 2020 with volumes catching up with the amounts recorded in 2019. Hence the ITAC review is a timely reminder of the perils facing local producers.

South Africa’s general coronavirus experience has been an outlier compared to the rest of Africa with higher cases and deaths reported. Yet, it’s still reported lower per capita rates than many comparable countries in Europe and the Americas. Like the UK and Brazil, the country also holds the dubious distinction of having a coronavirus variant named after it. Its cement market appeared to snap back with pent up demand following the lifting of restrictions in common with other countries that implemented tougher public health rules. At which point the importers caught up again a few months later. The effects of South Africa’s second wave of coronavirus led to a lockdown in late December 2020. The effects upon building materials sales are likely to be less drastic than previously because this lockdown has had lighter restrictions compared to March 2020. Surrounded by all of this, the CCSA has sure picked a busy time to start work.

India: Birla Corporation has appointed Arvind Pathak as its managing director and chief executive director (CEO). He will succeed Pracheta Majumdar from 31 March 2021.
Pathak holds 36 years of experience in the cement industry. He has held CEO or equivalent positions for over 14 years in various large organisations which include ACC, Dangote Cement, Adani and Reliance Group. He holds a degree in Electrical Engineering from Indian Institute of Technology (Banaras Hindu University), Varanasi and a postgraduate degree in Industrial Engineering and Management. He has also been trained in a number of international management institutions.

Nigeria: Dangote Cement has warned the public that confidence tricksters are using its name to offer ‘jobs’ On social media. The Vanguard newspaper has reported that applicants are then being required to pay an ‘administrative fee’ to the scammers.

Corporate communications directorFrancis Awowole-Browne said, “The job advertisements are entirely false and are intended to defraud unsuspecting members of the public. We are clarifying that we have not engaged any individual or job website to advertise job positions on our behalf and none of the contact details, either phone numbers or email, are those of Dangote Cement.” He added, “At Dangote Cement, we fill job positions through a formal procedure with all career opportunities clearly listed on our own website. Furthermore, we never request candidates to pay a fee before they are considered for any position.”

Nigeria: Dangote Cement has donated a total of 10 auto rickshaws to cement plant and limestone mine host communities in Akpata, Iwaa, Obajana and Owo. The Nigerian Tribune newspaper has reported that the aim of the donations is to support business and community transportation. Deputy general manager Ademola Adeyemi said that these fall under the company’s corporate social responsibility.

Cameroon: Nigeria-based Dangote Cement plans to increase the capacity of its 1.5Mt/yr Douala cement grinding plant near the Cameroonian capital of Yaoundé to 3Mt/yr. The Nigerian Guardian newspaper has reported that the company’s current expansion plan aims at exploiting multiple trade routes within the African Continental Free Trade Area (AfCFTA).

Aliko Dangote said that the plant is “our largest greenfield project in a neighbouring country with which we not only share a border but also a long history of brotherly relations dating from our colonial days. Owing to the rich culture and history that we share, we have a better understanding of Cameroon.” He added, “Our desire to increase our investment with the Phase-2 project is based on not only the fast growth rate of the Cameroonian economy but also due to the warm welcome extended to us and the enabling environment created by the government of Cameroon. Our choice of Cameroon for this multi-million-dollar investment is quite strategic. Cameroon is the largest economy in Central Africa and is well endowed with abundant natural resources. The country also enjoys political stability, adequate security and growing infrastructural development. In addition, President Biya has created an enabling environment that has continued to attract investors both from within and outside the African continent.”