2016: DangoteCem defies recession, records 25.1% growth

05 April 2017

Despite the economic recession that hit Nigeria in 2016, Dangote Cement PLC (DANGCEM-NL) has continued upward, with a strong volume growth that resulted in 25.1% increase in revenues, amounting to N615.1 billion.

In the company’s audited results for the year ended December 31, 2016, CEO Onne van der Weijde, reminded how challenging last year was, not just for Nigeria but for many African economies. “But” der Weijde remarked, “we achieved sales and revenue growth of 25% and consolidated our position as Africa’s leading producer of cement.”

Dangote Cement leads Africa’s cement production volume with nearly 46 metric tonnes per annum (mta) across Africa, with Nigeria alone controlling a production capacity of 29.25mta.

After the strategic price reduction it introduced in September 2015, which came on very strong in the first four months of 2016, the company achieved 11 months of growth, with the majority of cement bags sold through retail outlets and distributors for small-scale building.

Financial highlights

  • Revenue up 25.1% to ₦615.1bn

  • EBITDA (earnings before interest, taxes, depreciation and amortization) of ₦257.2bn only slightly lower than 2015

  • Nigeria EBITDA of ₦242.0bn at 56.8% margin on lower selling price

  • Pan-African EBITDA of ₦26.5bn at 13.6% margin with some plants still ramping up

  • Earnings per share up 4.5% to ₦11.34

  • Net debt of ₦240.8bn, net gearing of 30.2%

  • Recommended dividend of ₦8.5, up from 6.25% 

Operating highlights

  • Dangote Cement’s export sales transform Nigeria into net exporter

  • Group cement volumes up 25% to 23.6mt

  • Record volumes from Nigerian operations, up 13.8% to 15.1mt, including exports

  • Rest of Africa sales volumes up 54% to 8.6mt

  • Sierra Leone commenced sales in February 2017; Congo expected operational in April.

To drive sales in 2016, DangoteCem introduced aggressive marketing such as the Mega Millions Dash to build strong brand awareness and a preference for Dangote Cement.

The company activated new, highly visible retail outlets in key markets and also provided large, branded storage containers for a number of vendors. “Our cement is now sold through over 15,000 outlets across Nigeria, and this is by far the largest retail activation campaign ever undertaken by any cement company in Nigeria,” DangoteCem noted in its 2016 results.

At distributor level, it added, it gave 120 trucks to more than 100 of its largest partners. “Marketing efforts in 2017 will include giving away a daily prize of a heavily branded 20-foot container loaded with 600 bags of cement over a 60-day campaign. This daily prize is worth about ₦2m to the retailer and provides a highly visible presence at the point of sale,” the report stated.

A landmark achievement by DangoteCem in 2016 is that it has transformed Nigeria into a cement exporting country, selling nearly 0.4mt to neighbouring countries.

The company’s pan-African operations have also done well, selling ±8.6mt of cement outside Nigeria – 54% more than in 2015.

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