Dangote Cement delivers strong financial performance

Dangote Cement reported a strong financial performance in 1Q17 despite a fall in volumes, with record revenues which were up by 48.1 per cent to NGN208.2bn (US$679.6m) and record EBITDA of NGN103.bn, up 42.3 per cent.

“Dangote Cement produced record financial results in the first three months of 2017. Despite lower Group volumes, we delivered significantly higher revenues and EBITDA after realigning prices late in 2016. Our new pricing strategy meant every tonne worked harder for us in Nigeria, delivering 78.4 per cent more EBITDA per tonne than the same quarter last year," Onne van der Weijde, CEO of Dangote Cement, stated.

The company has now begun sourcing a significant amount of coal from Nigerian mines owned by its parent, Dangote Industries. This has not only helped improve margins but also reduced the need for imported coal, Dangote Cement added.

Volumes and pricing update
In its home market of Nigeria, 1Q sales were down 16.5 per cent to 3.8Mt including exports which amounted to 87,000t. EBITDA rose in 4Q after price increase of NGN600/bag (or NGN12,000/t) and an improvement in the fuel mix. The company made an additional price adjustment of NGN150/bag at the start of 1Q17, NGN250 in February and NGN75 (inc VAT).

Dangote Cement's Pan-African operations, which now contribute nearly 28 per cent of group revenue, overall saw sales volumes rise by 21 per cent to 2.3Mt and revenues increased by 74.2 per cent to NGN58.7bn. In Cameroon over 300,000t of cement were sold in 1Q17, up 14 per cent YoY. Prices were stable at around US$99/t. Volumes in Ghana rose by 17 per cent to 287,000t with the average price at US$97/t. Operations in Ethiopia saw a 17 per cent increase in volumes to 527,000t. The average price achieved in 1Q17 was US$83/t. In Senegal sales increased by nearly 10 per cent to 360,000t.

Outlook for 2017
Providing an update on trading and outlook for 2017, Dangote said sharp increases in Nigerian EBITDA/tonne will drive substantial market gains for the year, even if volumes are flat. Volume growth is expected from increased exports from Nigeria to Ghana. Tanzania capacity will see a ramp up in 2017, and new capacity in Sierra Leone (0.7Mta) and Congo (1.5Mta) will make their first contribution to results. The Sierra Leone operations started selling cement since February and the first cement sales from Congo were expected in April.