Nigeria: Dangote to stabilise cement price

Speaking to shareholders at the 5th 2013 Annual General Meeting Aliko Dangote, Chairman of Dangote Cement Plc, pledged that his company would intensify direct-to-consumer deliveries to help stabilise cement prices in Nigeria.

Aliko Dangote admitted that most input costs into cement production have risen to an "astronomically high" level, but that his organisation is committed to reducing prices. Dangote sold 13.3Mt of cement in Nigeria within the financial year representing an increase of 28.2 per cent over sales recorded in 2012.

The chairman explained: “We have not increased the prices of our product, we have embarked on an initiative to improve the standard of cement sold in Nigeria and our belief is that 42.5 strength cement is the most appropriate for general use now.

“We have recently introduced 52.5 strength cement,which is appropriate for heavy load-bearing structures such as bridges and flyovers, we hope to increase the market share in the short-term by increasing the level of direct-to-customers deliveries and competing on product superiority.”

The company chairman also expressed optimism that the current year would offer better returns because trading has remained robust in the country and the company has started witnessing a solid start to the year with demand up in all regions.

In Ethiopia, work is well underway to build a 2.5Mta plant at Mugher with production expected late in 2014. In Tanzania, Dangote has begun work on a 3Mta plant at Mtwara that will be fully operational in 2015. In Zambia, work is underway on a 1.5Mta plant at Ndola with cement production expected in 2H14.

“We are reviewing plans for Kenya with a view to increasing the scale of our proposed factory from 1.5Mta to 3Mta, because we are confident there will be sufficient demand both in Kenya and neighbouring countries,” added Aliko Dangote.

Meanwhile, The BusinessDay online reports that for the three months through March 2014, Dangote Cement grew revenue by 8.53 per cent YoY to NGN103.56bn (US$641m), from NGN95.42bn as of 1Q13.

Despite the impressive performance at the top-line level, the company was unable to translate it to bottom-line growth as profit before tax (PBT) slid by 1.2 per cent to NGN53.01bn (US$328m) in 1Q14, compared with 53.68bn as of 1Q13.