Dangote Cement Plc. (9 months ended September 2015)
Rising non-Nigerian footprints: Top-line booster, bottom-line dampener
Dangote Cement Plc (Dangcem) released unaudited results for 9 months ended 30th September 2015 wherein revenues grew 18% YoY to
N365 billion while PBT and PAT rose 31% and 37% YoY to N201 billion and N193 billion respectively.
Rising non-Nigerian operations spares Nigerian market blushes
Dangcem’s Q3 15 revenues rose 22% YoY to
N123 billion–1% higher than our estimate–on the back of a 45%YoY jump in volumes to 4.9 million tones. Similar to the last two quarters, Dangote’s African operations continued to gain traction in Q3 15 with an over five fold jump in sales volume to 1.9MT and a 2% YoY rise in average non-Nigeria prices. Particularly, management noted that the business has already secured ~40% market share of Senegal’s ~2.7MTPA cement market with South Africa, Cameroon, Zambia and Ethiopia also gaining traction in the period. Thus, output from other African countries now accounts for 39% of overall group output (vs. 10% in Q3 14). In contrast, volumes in Nigeria fell 1%YoY to 2.98MT (vs. 4%YoY contraction in market demand to 4.9MT). Interestingly, the slower dip in output, relative to industry, shows that Dangcem gained market share in the period (+1ppt QoQ to 59% in Q3 15). Indeed, we had noted, in our 9M 15 earnings update, that Lafarge’s delayed response to price cuts by Dangcem led to some loss in market share to the latter. On the flip side, reduction in cement prices (-7%YoY in our estimates) dragged Dangcem’s Nigerian revenues ~8% lower YoY to N88billion.
… though ramp up of non-Nigerian expenses stokes margin pressures
However, Q3 15 COGS rose faster than revenues (+54% YoY to
N54billion), leaving gross profits only 4% higher YoY at N69 billion and related margins 9.3pps lower YoY at 56%. Input cost pressures in the quarter was largely driven by rising materials costs which mirrored increases in non-Nigerian production as well as higher depreciation and plant maintenance. Importantly, according to management, input cost pressures would have been higher without significant cost moderation in Nigeria due to substitution of coal for expensive LPFO.
Operating expenses rose 20% YoY to
N20 billion largely reflecting 65% YoY rise in selling and distribution expenses to N14billion. According to management, sharp increases in selling and distribution expenses reflects ramp up of administrative and logistical capabilities to support maiden market entry in Ethiopia and Zambia. In addition, the reported acquisition and assembling of 2000 distribution trucks also underpinned OPEX pressures in the quarter. Thus, despite a more than two fold YoY jump in other income to N2billion on the back of higher sundry incomes, EBIT grew only 1.3% YoY to N51billion. Accordingly, EBIT margin contracted 8.3pps YoY to 41.5%.
Higher interest rate environment aggravates margin compression…
Dangcem reported a threefold YoY jump in Q3 15 net finance cost to
N13 billion, mainly reflecting a twofold YoY increase in finance charges to N14billion and a 23%YoY decline in finance income to N1billion. Management linked the jump in finance expense to increase in interest on domestic debt (+4pps to 14%), rise in debt and eventual recognition of initially capitalized interest charges as expenses in the quarter. Consequently, PBT ( N38billion) and PAT ( N36billion) were 19% and 20% lower YoY with their respective margins declining ~15pps YoY to 31% and 29.4%.
…Earnings pressure to subsist on rising non-Nigerian expenses
Overall, growing non-Nigerian output continues to offset impact of weak Nigerian volumes—underpinning output growth resilience. With Zambian and Ethiopian plants already gaining traction therefore, we expect overall volume growth to remain strong in the near to medium term. Nevertheless, rising expenses associated with the business’ growing footprint across Africa is likely to leave both input cost and operating expenses higher for the rest of 2015—extending margin compression. On other fronts though, significantly benign effective taxes (average of 5.5% in the last three quarters)—in line with management’s expectation for the full year—, should slightly taper earnings pressure in the near term. Dangcem trades at 2015 EV/EBITDA of 11.06x relative to 7.5x for Bloomberg EMEA peers. Following net adjustments for the company’s 18% price slash and rising capacity utilization across non-Nigerian plants in September 2015, our FVE is now 4% lower at
N173.97. We remain NEUTRAL on the stock.
Deap Capital Management & Trust Plc reacts to ‘rumoured’ AMCON takeover
AMCON had dragged the company before a Court in a bid to recover the debt.
Deap Capital Management & Trust Plc has reacted to media reports about the supposed takeover of its assets by the Asset Management Company of Nigeria, AMCON.
In a statement that was signed by the Company Secretary, Yetunde Fashesin-Sousa, Deap Capital admitted that it is indebted to AMCON to the tune of N1.6 billion. It was also confirmed that AMCON owns a 20% equity stake in the fund management firm.
Note that the indebtedness arose after AMCON took over ownership of certain banks. Apparently, these are banks that Deap Capital originally owed. However, following the transfer of the unnamed banks’ assets to AMCON, the debts were also transferred alongside.
Meanwhile, AMCON had dragged the company before the Federal High Court in Lagos in a bid to recover the debt. A ruling on the case, which was delivered on January 28 by the Hon Justice John Terhemba Tsoho, was in AMCON’s favour.
Following the ruling, AMCON began the process of recovering the debt from Deap Capital Management & Trust Plc. The company said it has been cooperating in this regard by working towards repaying the debt.
The company also clarified that the assets that were taken over by AMCON belonged to its former directors whose names were not mentioned. Nairametrics could not verify if these directors are among those who were recently reinstated by the Securities and Exchange Commission, SEC. But we do know that AMCON had obtained a court order to attach the ‘former directors’ assets’ in its attempt to recover the N1.6 billion debt.
In the meantime, Deap Capital Management & Trust Plc said it is committed to resolving its operational challenges, including the recovery of its operational license and profitability issues. The company’s latest earnings report (for its Q1 period ended December 31st, 2019) showed a total income of N1 billion. There was also a N6.3 million loss for the period under review.
Deap Capital’s stock opened today’s trading session on the Nigerian Stock Exchange with a share price of N0.30. Year to date, the stock has declined by some -18%.
Lafarge Africa Plc. announces its board meeting and closed period for Q2 2020
The notification which was duly signed by General Counsel & Company Secretary.
Lafarge Africa Plc. notified the Nigerian Stock Exchange and the investing public that he closed period will commence on Wednesday, 8th July 2020 until the unaudited financial statement for the second quarter ended 30th June 2020, is released to the Nigerian Stock Exchange.
In a disclosure on the Nigerian Stock Exchange, it wrote: “We hereby notify the Nigerian Stock Exchange and the investing public that a meeting of the Board of Directors of Lafarge Africa Plc has been scheduled to hold on Thursday, 23rd July 2020 to consider the second quarter financial results of the Company for the quarter ended 30th June 2020.”
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The notification which was duly signed by General Counsel & Company Secretary, Mrs. Adewunmi Alode explained further stating that “Accordingly, no Director, employee, persons discharging managerial responsibility and Advisers of the Company and their connected persons may directly or indirectly deal in the shares of the Company in any manner during the closed period.”
Over the past few months, it made a few board changes with the retirement of two of its Non-Executive Directors, as well as the appointment of three new Directors. It had also spun off its South African subsidiary, Lafarge South Africa Holdings (LSAH), last year.
Lafarge Africa’s Q1 2020 revenue was up 9.8% year-on-year to N63.7 billion, driven by higher Cement Sales (a figure up 11% year-on-year to N62.3 billion) which offset the weakness in Aggregate and Concrete (down 21% y/y to N1.4bn). Its EBITDA grew by 2.4% year-on-year to N19.3 billion as well. As at Tuesday the 7th of July, the share price of the company was N10.00.
AXA Mansard Insurance Plc gives notice of Annual General Meeting
The AGM will be live-streamed to enable shareholders and stakeholders participate.
Insurance firm, AXA Mansard Insurance Plc., has given notice of its board of its Annual General Meeting (AGM) scheduled for Wednesday, July 29, 2020, at 10:00 a.m.
The announcement which was disclosed by Nigerian Stock Exchange (NSE) in a corporate disclosure on July 7th, 2020 and signed by Company Secretary, Omowunmi Mabel Adewusi read, “Notice is hereby given that the twenty-eighth annual general meeting of AXA Mansard Insurance Plc. will hold at the Oriental Hotel, no. 3, Lekki Road, Victoria Island, Lagos on Wednesday, July 29, 2020, at 10:00 a.m.”
As noted, the purpose of the AGM is to transact the following business:
- To receive the Audited Financial Statements for the year ended December 31, 2019, and the Reports of the Directors, Auditors and Statutory Audit Committee thereon
- To authorise Directors to fix the remuneration of the Auditors
- To elect Directors and
- To elect members of the Statutory Audit Committee.
In order to ensure that all relevant stakeholders can be a part of the AGM, the company will also be streaming the AGM live. It noted that “This will enable shareholders and other stakeholders who will not be attending physically to follow the proceedings.”
The link for the live streaming of the Meeting will be made available on the Company’s website at www.axamansard.com.
Recall that a few months ago, in March, the company’s Board of Directors announced the appointment of John Dickson as the company’s new Non-Executive Director. A month earlier, it also disclosed its plan to sell its pension management subsidiary (AXA Mansard Pensions Ltd) and some undisclosed real estate investments.
Its unaudited financials for the period Q1 2020 reveal a growth across revenue and profit lines. Gross written premium grew by 21% from N17.4 billion earned in Q1 2019 to N21 billion in Q1 2020. Profit for the year for the group grew by a commendable 120% from N890 million in Q1 2019 to N1.9 billion in Q1 2020.
As at Tuesday, the 7th of July when markets closed, the share price of the company was N1.59. The company’s EPS stood at 0.33 while its price to book ratio stood at 0.6082.