Business

Dangote Cement: Sustaining growth on extensive project devt

The consumption of cement in Nigeria has continued to increase due to rapid urbanisation and industrialisation, thus fuelling gains for Dangote Cement Plc. RHODA OGUNSEYE writes

 

The Federal Government’s adoption and implementation of the backward integration policy (BIP) in 2002 has seen Nigeria becoming self-sufficient in cement production. Dangote Cement Plc is one of the success stories of the policy, becoming sub-Saharan Africa’s largest cement producer.

 

This positive sentiment is rubbing off on the shares of the company. Dangote Cement listed on the Nigerian Stock Exchange (NGX) on October 26, 2010.

It is currently the third most valuable stock on the NGX with a market capitalisation of NGN 4.52 trillion, which makes about 16.1 per cent of the entire Nigerian Stock Exchange equity market.

Share price

Dangote Cement traded at 265.00 per share on Friday July 22. In the last four weeks, it lost 3.64 per cent. Over the last 12 months, Dangote Cement Plc share price rose by 6.85 per cent.

Forcast

According to Trading Economics global macro models projections and analysts expectations, Dangote Cement is predicted to be priced at 261.50 by the end of this quarter and at 248.47 in one year.

 

Financials

Dangote Cement Plc recorded a 24.2 per cent increase in its revenue and an 18 per cent increase in profit after tax (PAT) in the first quarter of this year. The unaudited report for the three months ended March 31, 2022, showed revenue of N413.2 billion and a PAT of N105.9 billion.

Analysis of the cement giant’s three months results indicated that Dangote Cement sold a total volume of 7.2 metric tonnes (Mt) of cement across the group with Nigerian operations accounting for 4.8Mt while the rest of Africa did the balance of 2.4Mt. Chief Executive Officer, Dangote Cement, Michel Puchercos, said that the company started the first quarter on a positive note despite the new uncertainties brought by a very volatile global environment.

He stated that increases recorded in revenue and profitability drove strong cash generation across the Group. PAT rose to ₦105.9 billion, up 18 percent compared to last year, while Group EBITDA rose to N211.0 billion or 18.6 per cent with an earnings before interest, taxes, depreciation, and amortisation  (EBITDA) margin of 51.1 per cent.

“On the operational side, we are ramping up production at our Okpella plant and are progressing well to deploy grinding plants in Ghana and Cote d’Ivoire.

Demand remained strong across all markets, and we remain confident that Dangote Cement is positioned to meet customers’ expectations despite these temporary challenges. “Continuing our efforts to deliver shareholder value, Dangote Cement completed the second tranche of its buyback programme.

Following the completion of both tranches, Dangote Cement has now bought back 0.98 per cent of its shares outstanding. This share buy-back programme reflects the Company’s commitment to finding opportunities beyond dividends to return cash to shareholders.

“The volatile international context is strengthening our efforts to ramp up the usage of alternative fuels and execution of our export-to-import strategy.

Reducing our dependence on imported inputs and making our markets self-sufficient has never been more relevant from a regional perspective. Our continuous focus on efficiency, meeting strong market demand and maintaining our costs leadership drives our ability to consistently deliver superior profitability and value to all shareholders.”

Dividend

 

Shareholders of Dangote Cement Plc on Tuesday approved a 25 per cent rise in dividend payment for the 2021 financial period. The shareholders approved N20 per share for the year ended December 31, 2021 from N16 paid in the preceding year during the company’s 13th Annual General Meeting in Lagos.

At the meeting, the company disclosed that Dangote Cement in the year under review achieved its highest profit before tax in its history at N538.4 billion. It added that the company recorded group volumes of 29.3Mta, up by 13.8 per cent.

Exceptional EBITDA of N684.6bn was achieved, up by 43.2 per cent owing to strong cost control mea-  sures. Speaking, the Chairman of the company, Aliko Dangote, said that “over the last decade, Dangote Cement has recorded exponential growth across all areas.”

He added: “Group volumes were now at almost 30Mta, our capacity has tripled to 51.6Mta and we export cement from five countries across Africa.

“As the volatile global environment propels us into a new era of uncertainties, we are fortunate that the last two years have taught us resilience, adaptability and grit. “These values are what we need to face unpredictable times in the future.

“Dangote Cement remains the leading cement company in Africa, well-positioned for a positive and sustainable future. We are resolute in transforming Africa, while creating sustainable value for our stakeholders.”

Dangote said in January 2022, the company completed the second tranche of its buyback programme as Dangote Cement has now repurchased 0.98 per cent of its outstanding shares. He said this share buy-back programme reflects the company’s unwavering commitment to creating value and identifying opportunities to return cash to shareholders.

The chairman added that “we began operations in our new 3Mta Okpella plant in Edo State in 2021, where we are successfully ramping up production and have contributed to creating a new industrial hub.

BOND

Dangote Cement Plc successful completed its ₦116 billion Series 2 Bond issuance (the “Bond Issuance”), which is the largest corporate bond issuance in the history of the Nigerian capital markets.

The bond issuance, which is the second issuance under the Company’s ₦300 billion Multi-Instrument Issuance Programme, attracted participation from a wide array of institutional investors including  pension funds, asset managers, banks, insurance companies and high net-worth individuals.

The Bond Issuance comprised three tranches: a 5-year Tranche A issuance priced at 11.85 per cent, a 7-year Tranche B issuance priced at 12.35.per cent, and a 10-year Tranche C issuance priced at 13.00 per cent. The proceeds of the Bond Issuance will be used to finance the company’s Nigeria expansion projects, short-term debt refinancing and working capital requirements.

Stanbic IBTC Capital acted as Lead Issuing House/Bookrunner to the Bond Issuance, whilst Absa Capital Markets, Meristem Capital, Standard Chartered, United Capital, Coronation Merchant Bank, Ecobank Development Company, FBNQuest Merchant Bank, FCMB Capital Markets, Futureview Financial Services, Vetiva Capital, Quantum Zenith Capital and Rand Merchant Bank Nigeria acted as Joint Issuing Houses.

 

Commenting on the bond issuance, Puchercos said: “Dangote Cement is delighted to have successfully undertaken a second issuance under our Multi-Instrument Issuance Programme which was launched last year, and even more delighted to have concluded the most significant corporate bond issuance in the history of the Nigerian debt capital markets.

“This landmark transaction would fund our expansion projects and further support the implementation of our export strategy. I want to thank our stakeholders and investor community for their strong participation in another Bond issuance with the company.”

The bond notes will be listed on the Nigerian Exchange Limited and FMDQ Securities Exchange

Last line

The company has continued to develop strategic plans to made the company endear to its customers. Latest of such is its Dangote Cement Bag of Goodies Season 3 promo where it promised to made 25 of its consumers millionaires monthly.

 

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