Companies
Dangote to create 100,000 jobs with sugar projects
Dangote Foods, comprising of Dangote Flour Mills, Dangote Sugar Refinery and NASCON Allied Industries recently rewarded a total of 77 customers who distinguished themselves in 2017.
At the award night held at the Expo Centre of Eko Hotel Victoria Island Lagos, 11 winners emerged from each of the geopolitical regions while the balance was in the national category. A total of 23 distributors won awards from Dangote Sugar Refinery, 27 from Dangote Flour Mills and 27 from NASCON Allied Industries.
Speaking at the 2018 Customer Celebration and Distributor Awards Night President/Chief Executive Officer, Dangote Industries Limited, Aliko Dangote said that the event was organized in appreciation of customers for making Dangote food products a house hold name in Nigeria.
He said “we are gathered here in honour of our customers and distributors who have distinguished themselves in the distribution of our food products range and also to thank all the staff at DFM, NASCON and Dangote Sugar for their contribution.”
The business mogul added, “we are a major player in the food sector where our business units; Dangote Flour Mills, Dangote Sugar Refinery and NASCON Allied Industries are clear leaders in their respective fields. We are firm believers in the vast economic potential of Nigeria. This has informed our desire to invest massively in some states across the country. Our target is to ensure that Nigeria becomes self-sufficient in all the sectors where we play.”
Giving an update on the strides of the Group in the food sector, Dangote stated, “in the Sugar sector, we developed a sugar backward integration project plan targeted at the production of 1.5MT/PA from various sites across Nigeria, in the next 10 years and we are acquiring about 150,000 hectares for sugar plantation in Adamawa, Taraba, Nasarawa, Kwara, Kogi and Niger States. We signed memorandum of understanding (MoU) with the Nasarawa State Government for the construction of an integrated sugar complex located at Tunga.”
He envisaged that this will generate over 100,000 employment opportunities from all these sugar projects, saying that “we will establish integrated sugar mills within these locations, generate electricity, and produce animal feeds from bagasse and molasses.”
For Dangote Flour Mills, he said, “we have a three-point growth plan, to focus on sustaining high product quality, improving customer engagement and strengthening supply chain capabilities.
“We introduced new improved pasta product called ‘Excellente’ which comes with a new taste and in new packs. Our flour has remained the bakers’ choice and toast of many confectionary companies. We are currently conducting tests to evaluate the suitability of our soils in Nigeria in the cultivation of wheat.”
Dangote stated that new investments in NASCON Allied Industries would boost efficiency and enhance better returns, saying “we are producing edible salt in several packages. We are also choice producers of industrial salts and planning to venture into the production of vegetable oil and tomatoes.
He pointed out that the Group’s push for backward integration in providing its own raw materials on a massive scale has led to the planned investment of $4.6 billion over the next three years in sugar, rice and dairy production alone, noting that this will eliminate the country’s reliance on imported materials, and the foreign exchange headaches that comes with it.
He further stated that the Group annual revenues exceeded $4.1 billion in 2017, saying that “our new projects include the world’s largest single train petroleum refinery, which is being built in Ibeju-Lekki, Lagos at the cost of $12 billion will address Nigeria’s energy needs and eliminate importation of refined petroleum products.”
Also, Director, Dangote Sugar Refinery, Ms. Bennedikter Molokwuin her welcome remarks on behalf of the three companies, commended the distributors’ efforts in making it possible for Dangote food products to be the preferred choice in all households.
According to her, you have helped to create awareness for Dangote food products across the six geopolitical regions and has led to increased consumption of our products in the regions and better balance sheets for our food products’ companies.
“We appreciate your commitment and promise that this partnership will remain mutually beneficial, with enduring values for all stakeholders. Your loyalty drives our business as we depend on you for prompt and frank feedback from consumers.”
Companies
Dangote Cement to extend clinker export to other African countries
Dangote is on course to sell more clinker across West Africa and commence shipment to Central Africa in H2 2020.
The Management of Africa’s largest cement producer, Dangote Cement Plc (DCP), disclosed during a virtual event yesterday, that the cement producer is set to commence clinker export to other African countries within the next few weeks.
The Acting Group CFO, Guillaume Moyen, made this known in his presentation at the joint virtual event with NSE, tagged “Facts Behind the Figures and Sustainability report’’ on Wednesday, 24th September, 2020.
Backstory: In its half-year report, the Management of Dangote disclosed that on 12 June 2020, the maiden shipment of 27.8Kt of clinker from Nigeria to Senegal left the Apapa Export Terminal.
READ: Dangote Cement’s N100 billion CP admitted on FMDQ Securities Exchange
The Management reiterated that the company is on course to sell more clinker across West Africa, and commence shipment to Central Africa in H2 2020. As it is in line with the Group’s vision of making West and Central Africa, cement and clinker independent, with Nigeria the main export hub.
The absence of limestone in much of West Africa, especially those in the coastal states, forces those countries to import bulk cement and clinker from Asia and Europe, and this is quite expensive.
READ: BUA Cement Plc posts impressive unaudited H1, 2020 financial results
However, Dangote Cement plans an ‘export–to–import’ strategy, positioning Nigeria as the main export hub of the continent, in a bid to serve West and Central Africa countries from Nigerian factories, making the region cement and clinker independent.
This is consistent with the Group’s vision of cementing Africa’s economic independence, as this would lead to lower clinker cost for pan-African operations, due to the proximity of Nigeria to these countries, as clinker landing cost will be cheaper.
READ: Nigerian billionaires lose billions amid COVID-19 pandemic
The Management emphasized that this is possible, as Nigeria can serve a potential market of 15 countries, with over 350 million people, given the county’s relative abundance of quality limestone, especially in key Southern regions.
It is important to note that DCP’s clinker volume, according to figures contained in its H1 2020 results, has increased to 60Kt from 12kt in H1 2019, which translates to 400% increase.
The benefits of DCP’s export strategy
It is noteworthy that the innovative strategy of Dangote Cement Plc is expected to;
- Cement Africa’s economic independence, and contribute to the improvement of continental, regional, and intra-regional trade, as the company seeks to make regional and continental free trade agreement a reality.
- Ensure that the increase in production due to exports, leads to increase in capacity utilization in the Nigerian operation, and in turn, reduces fixed cost per tonnes.
- Increase foreign revenue exchange for the Nigerian operation, and offset foreign exchange risks.
- Reduce clinker landing cost, by leveraging on the proximity of Nigeria to other African countries.
Some of the benefits of our export strategy are Higher capacity utilization of our facilities; Ecowas benefits; Foreign exchange; and Lower clinker cost for Pan-Africa operations – @guillaumemoyen
#NSEhostsDangote https://t.co/TGd2N6JGZw pic.twitter.com/TvPGHunsb0— The Nigerian Stock Exchange (@nsenigeria) September 23, 2020
Companies
Fidelity Bank to raise N50 billion in bonds in Q4 to refinance existing debts
The new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
One of Nigeria’s second-tier commercial banks, Fidelity Bank Plc, has concluded plans to issue up to N50 billion ($131.3 million) in local bonds by the fourth quarter of 2020, in order to refinance existing debts as the yields drop.
The disclosure was made by the Chief Operations and Information Officer, Gbolahan Joshua, during an analyst call on Tuesday, September 8, 2020.
The crash of crude oil price globally, which was triggered by the novel coronavirus pandemic, has led to a decline in bond yields on the local debt market. This has made foreign investors to dump their local assets, leaving excess liquidity in the money market. This has also put a lot of pressure on the foreign exchange market as they look for dollars to repatriate their funds.
READ: Guinness Nigeria finding it hard to refinance its loans due to dollar scarcity
The Fidelity Bank top executive disclosed that the new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
The global economic situation has seen yields in the debt market drop from as high as 18% about 3 years ago to less than 5% for the one-year treasury bill.
READ: GTBank, Zenith Bank, UBA record losses, investors down by N12.2 billion
Fidelity Bank had revealed that it expected to see a 15% drop in profit this year when compared to 2019 result due to the coronavirus pandemic. Its profit after tax increased by 21.9% to N12 billion for the half-year 2020.
The second-tier bank also disclosed that its income declined in the second quarter due to a downward review of lending rates on loans as a result of the economic downturn.
Companies
Heineken buys more units of Nigerian Breweries Plc
The Dutch firm has invested N276 million in NB since August, to increase its stake in the Brewer by 0.10%.
The major shareholder of the largest brewer in Nigeria, Heineken Brouwerijen B.V, has increased its stake in Nigerian Breweries, with the purchase of 233,110 additional units of Nigerian Breweries shares. This was disclosed by the company in a notification sent to the Nigerian Stock Exchange, which was seen by Nairametrics.
According to the notification, which was signed by the Company’s Secretary, Uaboi G. Agbebaku, the purchase was made on the bourse over two transactions on the 2nd and 3rd of September.
This disclosure is a regulatory requirement that must be reported to the Nigerian Stock Exchange, especially when a major shareholder or director of a publicly quoted company purchases shares in the company they own.
READ: GTBank revenue for H1, 2020 rises to N225.14 billion
The analysis of these transactions indicates that the purchase consideration for the 233,110 additional units of Nigeria Breweries shares at an average price of N39.94 is put at N9.3 million.
This purchase and previous purchases further cement Heineken Brouwerijen B.V’s status as a major shareholder; the company has accumulated a total of 7,720,236 since 30th June.
READ: Vitafoam’s 2020 oncourse to make light–work of 2019
As of June 30th, when Nigerian Breweries released its Half-year financial results and reviewed its shareholding pattern, the company had exactly 7,996,902,051 outstanding shares, with Heineken Brouwerijen B.V being the majority shareholder with 3,019,363,804 units, which amount to 37.76% of the total shares of the company outstanding.
Hence, with the current purchase of 233,110 additional units, and previous purchases in August and September 1, which amount to 7,487,126 units, Heineken’s ownership percentage of Nigeria Breweries is now put at 37.85%.
Insider transactions, both sales and purchases, are often an indication of how shareholders perceive a company’s valuation. It could also mean a possible capital raise or that the majority shareholders are strengthening their existing holdings.
READ: Heineken scoops more Nigerian Breweries shares in insider disclosure
In like manners, the purchase of the shares of Nigerian Breweries by Heineken and other majority shareholder has mopped up stray volumes on the bourse, and pushed the stock price higher by 29% or N9, from N31 it closed at on the 3rd of August to its current value of N40 with 38.2x earnings.
About the company
Nigerian breweries is the largest brewing company in Nigeria. It engages in the brewing and marketing of lager beer, stout and non-alcoholic malt drinks, and the bottling of the Schweppes range of soft drinks and Crush Orange. Its brands include Star, Gulder, Legend, Heineken, Maltina, Amstel Malta, Fayrouz, Climax, Goldberg, Malta Gold, and Life. These products are mainly sold in Nigeria and other neighbouring countries.
READ: Flour Mills and its diverse challenges
Key takes on NB’s financials
Nigerian Breweries was affected by the disruption in the global and domestic demand and supply chain, as profit after tax of the largest brewer dropped by as much as 58%, at the back of the adverse impact of the sharp contraction in economic activities.
The knock-on effect of the COVID-19 lockdown, which affected the trade segment of the business, affected the company sales and this triggered the 11% drop in revenue in the first half of the year.
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