Dan­gote ce­ment ex­pan­sion

Goal is to cap­ture an ever big­ger share of Africa’s mar­ket

The Star Early Edition - - BUSINESS REPORT - Tawanda Karombo

NIGE­RIAN busi­ness­man Aliko Dan­gote is cap­tur­ing a share of the African ce­ment mar­ket, with his com­pany, Dan­gote Ce­ment, say­ing yes­ter­day that in­terim vol­umes across the en­tire re­gion had in­creased by 12.6 per­cent.

Dan­gote com­petes against other ce­ment man­u­fac­tur­ers in Africa, such as La­farge and PPC in ad­di­tion to other smaller pro­duc­ers.

“Our pan-African op­er­a­tions are grow­ing well and in­creas­ing mar­ket share.

“We saw our first sales from Sierra Leone in the first quar­ter and our new plant in the Repub­lic of Congo will be in pro­duc­tion at the end of July, fur­ther in­creas­ing our foot­print across Africa and strength­en­ing our po­si­tion as its lead­ing man­u­fac­turer of ce­ment,” chief ex­ec­u­tive Onne van der Wei­jde said.

Vol­umes in Africa, ex­clud­ing Nigeria, in­creased to 4.7 mil­lion tons dur­ing the first half pe­riod to the end of June, driven by nearly 1.1 mil­lion tons sold in Ethiopia, fol­lowed by about 0.7 mil­lion tons in Sene­gal as well as 0.6 mil­lion tons and 0.5 mil­lion tons of ce­ment that the man­u­fac­turer sold in Cameroon and Ghana re­spec­tively.

In Tan­za­nia, Dan­gote sold 0.4 mil­lion tons, while the vol­umes for Zam­bia surged to 0.3 mil­lion tons.

How­ever, the Nige­rian home mar­ket fell from 8.8 mil­lion tons to 6.9 mil­lion tons at­trib­uted to “the on­set of rains which stalled many con­struc­tion projects” in the coun­try.

The surge in vol­umes for the rest of Africa saw rev­enues climb­ing by 63.7 per­cent to $924.5 mil­lion (R12.02 bil­lion).

The rev­enue surge has come on the back of “for­eign ex­change gains when con­vert­ing the sales from coun­try lo­cal cur­ren­cies” into naira.

Inside Nigeria, rev­enues rose by 34.5 per­cent, de­spite the slide in vol­umes which de­clined 21.8 per­cent to 6.9 mil­lion tons.

“We es­ti­mate our mar­ket share to have been about 64.5 per­cent dur­ing the first six months of 2017,” the com­pany said.

An­a­lysts at Ex­otix Part­ners said re­cently that Dan­gote Ce­ment’s African op­er­a­tions con­tin­ued to record op­er­at­ing losses due to the high cost base in mar­kets such as Tan­za­nia and new op­er­a­tions in Sierra Leone.

How­ever, the an­a­lysts noted key neg­a­tives for the com­pany such as the 51 per­cent year-onyear in­crease in group cost per ton for the first quar­ter pe­riod “on ac­count of new high-cost­base sub­sidiaries, the im­pact of de­val­u­a­tion on dol­lar-linked costs and trans­la­tion of sub­sidiaries, al­beit cost per ton de­clined 18 per­cent quar­ter-on-quar­ter, re­flect­ing strong cost man­age­ment” in Nigeria.

PHOTO: BLOOMBERG

Ce­ment trucks, op­er­ated by Dan­gote Ce­ment, de­liver sup­plies to the site for the Eko At­lantic city pro­ject, Nigeria, in this file photo. Eko At­lantic city is an area of land re­claimed from the At­lantic ocean be­ing de­vel­oped into real es­tate.

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