This week Dangote Cement Group reported on its 1Q18 business results that saw group revenues surge up 16.3 per cent to NGN242.1bn (US$0.67bn). Cement sales in Nigeria have been particularly strong rising by 5.3 per cent to 3.97Mt, while exports from the company’s homeland have risen to 211,000t in 1Q18 with Togo, Niger and Ghana the main export destinations. Pan-African sales increased 4.4 per cent YoY to 2.24Mt.
"The first quarter of 2018 has started strongly with substantial increases in revenues and profitability that drove excellent cash generation across the Group. Despite a slightly slower start to the quarter, Nigerian volumes increased significantly in March and underpin our confidence that 2018 will be a good year for the Group. Across our pan-African operations, higher revenue per tonne boosted revenues and increased EBITDA margins, with great potential to improve further when Tanzania switches to gas," said Joe Makoju, group CEO.
Nigerian market
Dangote has been making good progress in Nigeria where the Obajana plant sold 1.8Mt of cement in 1Q18, the Ibese works 1.6Mt and the Gboko unit nearly 0.3Mt of cement in the quarter. March sales were nine per cent higher than in March 2017, driven by housing and commercial construction demand.
The company's reliance on imported coal has ended with the ability to use third-party Nigerian coal and all of the 10 kilns in Nigeria can run entirely on gas, coal or low-pour fuel oil (LPFO) or a mixture of these fuels. The company also bought 100 bulk cement transporters to increase bulk cement sales for commercial building, while the number of branded containers was increased for dry storage to aid smaller distributors.
Pan-African ex-factory prices
The price movement Dangote’s cement in its pan-African countries also impacted favourably on company results. In Cameroon the ex-factory price of cement reached US$119/t in March 2018. The market of the Republic of Congo is slowly developing for Dangote, now that it has its Mfila factory in operation, and ex-factory cement prices fetched US$92/t. Dangote could receive even better ex-factory prices of US$98/t in Ghana and US$97/t in Sierre Leone. The markets where competition is rising are in Zambia, Senegal and Ethiopia. In Zambia ex-factory cement prices averaged US$87/t in March, in Senegal US$74/t, but in Ethiopia they fell to an average of US$67/t in March 2018.
The top market for Dangote outside of Nigeria in the 1Q18 was Zambia where volumes rose by 29.9 per cent and the company enjoys a market share of approximately 43 per cent. Cameroon also saw cement volumes rise by 9.6 per cent and Senegal’s volumes were up by 7.7 per cent.
Ethiopian troubles
The Ethiopian market has suffered from disruption in the Oromia region with civil unrest. This cost the Mugher plant 10 days loss of shipments, which gave Dangote the opportunity to conduct some kiln maintenance.
Better news for Dangote came on being contracted to supply an additional 25,000t of cement to government housing projects in Addis Ababa. Dangote has also reached an agreement with local communities on royalties for raw materials and additional costs will be more than offset by increased pricing.