Dangote Cement releases 2014 results

Dangote Cement has released its audited results for the year ended 31 December 2014.

Financial highlights

• Revenue increased by 1.4% to N391.6 billion.
• Cement sales remained in line with 2013, with volume increases in South and East Africa mitigating contractions in Nigeria, West and Central Africa.
• Gross profit totalled N248.6 billion, down 2.8%.
• EBITDA declined by 2.7% to N223.4 billion at a 57% margin.
• Net debt stood at N222 billion at the close of the year.

Regional operations

Nigeria

• Sales dropped by 3.2% to 12.9 million t. This accounted for 61% of cement sales in Nigeria.
• Dangote Cement’s largest markets in Nigeria are Lagos and the southwest, representing 28% of sales. The southeast accounted for 12%, the south for 20% and the northeast for 3%.
• Some N371.6 billion of the Dangote Cement Group’s revenue (94.9%) was generated in Nigeria in 2014. Operating profits came in at N190.9 billion, down 5.1%.
• Cement production was hampered by shortages of gas and the backup fuel, LPFO, in 1H14. This particularly affected the Obajana cement plant, which is primarily gas-fired. In addition, increased pressure on Nigerian LPFO meant that Dangote Cement had to import it, leading to extra costs. Gas supply to Obajana improved in 4Q14, with gas firing back up to 100% in November and December.
• A longer than usual rainy season impacted demand levels.
• In light of the gas and LPFO shortages, Dangote Cement commissioned coal grinding facilities for line 3 at Obajana and has commenced construction of new coal facilities for lines 1, 2 and 4, which are scheduled for completion in mid-2015. New line 4 was commissioned in November, bringing the plant’s total production capacity to 13.25 million t.
• The Ibese plant now has a capacity of 12 million t. Commissioning commenced on lines 3 and 4 in 4Q14, and commercial sales from these lines will begin in 2015. Coal mills were commissioned for lines 1 and 2 to provide an alternative backup to LPFO. Work on coal grinding facilities on new lines 3 and 4 will be completed in mid-2015.
• Sales of cement produced at the Gboko plant improved by 15.7% to reach 1.6 million t. Following the expanded capacities at Obajana and Ibese, the company decided to mothball the 100% LPFO-fuelled Gboko plant in November. Dangote is now installing coal mills and three 30 MW coal-fired power plants so that the Gboko facility will be able to operate more cost effectively by 2016. It is hoped that coal will be able to be mined locally rather than imported.

West and Central Africa

• This region achieved revenues of N6.2 billion in 2014, down 56%on 2013’s N14.1 billion.
• An operating loss of N3.9 billion has been attributed to losses on operations in Ghana and startup costs in Senegal and Cameroon.
• Conditions for cement importers in Ghana were unfavourable in 2014. However, a new packing plant has been expanded in Tema and planning for a clinker grinding plant in Takoradi is in the advanced stages.
• The Ebola crisis impacted Dangote Cement’s plans in Liberia and Sierra Leone. A 0.5 – 0.7 million t import facility in Freetown will open later than scheduled, in 2015, as it awaits the delivery of equipment from Europe.
• A 1.5 million t grinding plant is under construction in Cote d’Ivoire, located at the port of Abidjan. This will begin supplying domestic markets in 2H16.
• A 1.5 million t integrated cement plant in Madingou, Republic of Congo, is due to begin operating in 2H16.
• Dangote’s new 1.5 million t integrated plant in Senegal was commissioned in December.
• A US$140 million, 1.5 million t grinding plant at the port of Douala in Cameroon will start up in 1Q15.

South and East Africa

• This region represented 5% of the Group’s revenues (N13.9 billion).
• Dangote Cement’s joint venture with Sephaku Holdings, Sephaku Cement, began operating in 2014. This includes the Aganang integrated cement plant and the Delmas grinding plant.
• Cold commissioning of equipment at the 1.5 million t plant in Ndola, Zambia, commenced at the end of 2014.
• The 2.5 million t plant in Mugher, Ethiopia, is expected to begin operating in early 2015.
• The new 3 million t Mtwara plant in Tanzania is scheduled to start up at the end of this year.
• Dangote Cement is reviewing plans to increase its capacity in Kenya from the proposed 1.5 million t to 3 million t. It does not intend to form a joint venture with a local manufacturer.

2015 plans

• New plants in Cameroon, Zambia, Ethiopia and Tanzania will open this year.
• The Gboko plant will be equipped to operate on 100% coal in terms of the kilns and power.
• Coal upgrade projects will be completed by mid-2015, including Obajana lines 1, 2 and 3, and Ibese lines 3 and 4.

Comment

“I am proud to report that we commissioned nine million tonnes of new capacity at our Obajana and Ibese plants and this puts them amongst the biggest cement plants in the world,” said D.V.G. Edwin, Executive Director. “Outside Nigeria, we opened up new factories in South Africa and Senegal in 2014 and our grinding plant in Cameroon has just become operational. We have started commissioning our plants in Zambia and Ethiopia and are on track to open more factories in Africa in the coming years. The success of our expansion is evidence that we are delivering on our strategy to become a much larger, more international company.”

“Despite the challenging conditions of the erratic fuel supply and prolonged rainy season that affected revenues and profitability in Nigeria, the fact that we have increased our dividend payout ratio is a clear sign of confidence in our future,” added Mr Edwin.

Adapted from press release by Louise Fordham

Read the article online at: https://www.worldcement.com/africa-middle-east/27032015/dangote-cement-2014-results-596/