Dangote Cement, Africa’s largest producer of the building material, cut prices in its home market of Nigeria in an attempt to boost cement consumption and compete with imports.
The price cuts to its 3X cement brand by 6 000 naira ($30.23) per metric ton will still allow Dangote to achieve strong returns, CEO Onne van der Weijde said on Thursday. The Lagos-based company is also hoping the lower prices will help increase export sales to neighbouring nations, he said.
Dangote Cement is seeking to grow sales and protect market share in Nigeria, while rapidly expanding elsewhere in sub-Saharan Africa. The company has grappled with fuel shortages in its home market this year that have hurt demand, and in December it raised prices to protect profit margins amid a devaluing local currency.
Nigeria, Africa’s biggest crude producer, has been hobbled by a halving of oil prices in the past year and the toll of an Islamist insurgency in the country’s north.
“We hope that reducing the cost of cement will help to stimulate building work across Nigeria at a time when the economy is in need of a boost,” Van der Weijde said. “We believe our cost-saving initiatives and new pricing strategy will help to support the naira by reducing unnecessary imports and by enabling us to generate valuable foreign exchange earnings.”
About 42% of Dangote’s cement sales by volume were sold outside of Nigeria in July, compared with 22% in the first six months of the year, and just 8% in 2014.
