Nigeria in focus
Nigeria, Africa's biggest cement market, is still pushing the bar in terms of profits for cement companies at a time when other countries are struggling to overcome the financial constraints arising from COVID-19 and general apathy for cement demand. Nigeria has been at the head of the queue to see African cement demand recovering with BUA Cement and Dangote cement reporting an upturn in 1H20 sales, while exports have begun for Dangote.
BUA Cement's 1H20 results saw a robust 12.7 per cent rise in revenues YoY to NGN101.3bn (US$261.07m). The company is located in the northwest, south and southeast regions of Nigeria with a total cement capacity of 8Mta. It is also commissioning a 3Mta greenfield plant in Sokoto state, which is scheduled to come on-stream in 2021.
BUA Cement's revenue rise was well ahead of rival Dangote Cement's two per cent revenue growth, but Dangote sold a staggering 7.38Mt of cement in Nigeria in the 1H20, which was up 1.8 per cent.
The other heavyweight in Nigeria, LafargeAfrica achieved net sales of 56,845t in the 2Q20 and 120,540t in the 2H20, the latter being a rise of 2.3 per cent on the 117,885t of cement the company sold in the 1H19.
Khaled El Dokani, country CEO of Lafarge Africa, added: "2Q20 results remained resilient with net sales of -5.1 per cent [56,845t] and recurring EBIT +29.7 per cent, compared to prior-year, despite the impact of the COVID-19 pandemic."
Total domestic sales by companies in Nigeria's cement and clinker manufacturers reached 7.41Mt in the 1H20. LafargeHolcim Africa added that the medium- to long-term prospects in Nigeria remain positive.
Lockdown hits April sales
The pandemic has had its complications in Nigeria with Dangote revealing that the pandemic forced a full lockdown in Lagos state, Abuja (FCT) and Ogun state from 31 March to 4 May 2020. Dangote Cement sold 7.382Mt of cement in 1H20. However, the company's April deliveries were severely impacted and were 28 per cent lower than the volumes dispatched in the same period last year. Other states joined the complete or partial lockdown during April.
Dangote's export incentive
Although domestic cement sales have been rising, Dangote Cement has started exports from Nigeria. Last year the Nigerian government closed its border to curb the smuggling of rice and the illegal arms trade, which also made cement and clinker exports impossible. However, 27,800t of clinker was exported by Dangote in June 2020 from Apapa Port, Lagos, to Senegal. The emergence of Dangote as a cement and clinker exporter is expected to increase the company’s foreign exchange earnings as it expands the business further into the markets of Côte d'Ivoire, Cameroon and Ghana.
"Our target is to export at least 4Mta of clinker to various parts of Africa." said Alhaji Sada Ladan-Baki Dangote Group executive director.
"The beauty of what we have done is that we are going to be generating foreign exchange for the country in terms of dollars and euros. For every batch of clinker we export, the money comes back to Nigeria. The amount we are talking about is not small. Presently, Dangote Cement should either be number one or number two exporter of cement in Africa and the revenue we have generated in the form of foreign exchange is running into millions.
"Today [15 June 2020], we have formally launched the Dangote Cement Export Terminal. We are still going to do another major launch when the second ship is going out of the country.
The company is soon to launch its export terminal in Onne, to enable the company export clinker, initially to its grinding facility in Cameroon and then to new grinding plants the company is building across West Africa.
"The exportation of clinker by Dangote will position the country to participate fully in the Africa Free Trade Liberalisation Agreement when it comes into being, so that Nigeria will be protected against foreign products. It will also help the country compete effectively with every country that are in the business of exportation of clinker. At Dangote Cement, we are going about it aggressively and we are seeing it as an opportunity," added Mr Ladan-Baki.
Summary
The transformation from being a country dependent on cement imports to an exporter will change Nigeria's cement sector profoundly. It will boost employment and foreign funds, while domestic cement supply will also be kept high with a chronic shortage of infrastructure at home. Therefore, Nigeria's cement producers are rapidly expanding capacities and continuing to grow, despite the setback of COVID-19.
