Dangote: 1Q2016 profits down 22% as volumes rise 70%

Dangote Cement has released its results for the year to March 31 2016. During this period volume sales grew 69.6 per cent to 6.4Mt, while profits slipped from NGN70bn (US$352m) to NGN55bn (US$276m).

Price cuts in Dangote’s Nigerian home market meant that even as volumes climbed 45 per cent to 4.5Mt revenues increased more slowly, rising by 5.7 per cent to NGN107bn (US$538m). The firm estimates that its market share in the period was 66 per cent.

Volume growth in other west and central African markets has been even more rapid, rising by 449 per cent YoY in 1Q2016 to reach 1.2Mt. Revenues in these countries – principally Ghana, Senegal Ethiopia and Cameroon – increased by 402 per cent to NGN25bn (US$118m).

South and east African markets made the smallest contribution to overall volumes, standing at 0.7Mt in 1Q2016 having risen 49 per cent YoY. Revenues from this region were also up around 17 per cent to NGN10bn (US$51m).

Dangote CEO Onne van der Weijde said: "We achieved record sales growth in Nigeria following the price reduction we implemented in September 2015 and this helped drive volumes up by 45 per cent in our core market. We are confident that the Nigerian market will grow substantially this year as major projects are enabled by funding packages designed to improve Nigeria’s infrastructure.

"At the time of last September’s price reduction we cautioned that our profit margin could be lower during 2016. However, in the first quarter of 2016 we have demonstrated that we have improved our absolute EBITDA and we are still achieving very good 51.5 per cent EBITDA margins at Group level despite the price cut in Nigeria and the general economic malaise that has affected a number of countries in which we operate.

"That we are gaining substantial market shares so soon after launching operations across Africa is a testament to our business model of competing with higher-quality products produced at lower costs. Our success in these markets is positioning us for even better performance in the coming years as economies begin to recover.

We have recently begun work on new plants to meet future needs in Nigeria and Côte d’Ivoire and have signed a Memorandum of Understanding for the financing and construction of our next wave of plants in Nigeria and beyond to reinforce our position as a global cement company."