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Market Views

Dangote Cement: “Our Pan African operations is performing well”

Dangote Cement also explains that the recent devaluation by the government has not had a negative effect on its finances

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Dangote Cement Plc. appoints Ms. Berlina Moroole as non-Executive Director

Dangote Cement has stated that its Pan African operations performed well in the first half of 2020. This was contained in a message sent to Nairametrics after an inquiry related to the performance of its Pan African operations.

The cement behemoth noted that its African operations contributed positively to its Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA). EBITDA for the Pan African operations was N12 billion even though it ended up posting a loss of after-tax of N17 billion.

READ MORE: Dangote pays 90% of net profits as dividend

“In total, Dangote Cement’s Pan-African business is not dragging the Group down. Pan Africa is contributing net positive Earnings before interest, tax depreciation, and amortisation as shown in note 4 to our interim financial statements. As also shown in that same note, Pan Africa is contributing positively to Profit from operating activities. When you go below the operations profit line and consider the funding the Nigerian business records income for the funding it provided to Pan Africa while Pan Africa picks finance costs for the funding it got from Nigeria and this is intergroup and will eliminate on consolidation.”

Devaluation Boost

The company also explains that the recent devaluation by the government has not had a negative effect on its finances especially as most of its dollar loans to its Pan African Businesses was an exchange rate gain to the Nigerian Parent entity. It also indicates that most of its loans are in Naira.

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“The Nigerian business has dollar investments in Pan-Africa. Owing to the naira devaluation in H1:2020, the Nigerian business gained more naira for its dollar investment. As such, there is an FX gain in the Nigerian business and an FX loss in the Pan-Africa business. Furthermore, our finance cost shall not be materially affected by the devaluation as we have limited dollar debt exposure, with only 14% of our debt in dollars.”

READ ALSO: MTN Nigeria revenues rises to over N100 billion monthly in 2020

Impact of COVID-19

Despite the impact of COVID-19, the company also showed strong performance in its Pan African operations. It claims margins remained strong volumes also increased. According to Dangote Cement, there was volume growth in 5 countries where it currently operates with Senegal as one of the best performing.

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“Our Pan-Africa operations performed well in the first half of 2020, with an increase in volumes and revenues, despite the impact of COVID-19. We have reduced our cash cost in 6 of our 9 Pan-African operations this year and recorded a record high EBITDA and EBITDA margin of ₦31.5B and 22% respectively. We had strong volume growth in 5 countries, with Ethiopia and Senegal performing particularly well. In fact, the output at our plant in Senegal continues to exceed its rated capacity.

READ MORE: Lafarge Africa is cutting it all out

“We have a vast opportunity to make West and Central Africa cement independent, and this is why we are deploying our ‘export to import’ strategy. Nigeria has an abundance of quality limestone, while much of West Africa is lacking it. As successfully delivered for Nigeria by Dangote Cement leadership, we are aiming at making Ecowas and CEMAC regions clinker and cement independent and eventually next exporters with Nigeria as the main supplier.”

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Market Views

Forex trading during COVID-19 era in Nigeria 

As the COVID-19 crisis continues to disrupt economic activities, it is best to understand the leverage offered to forex traders.

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Exchange rate falls at the NAFEX window on a depressed forex market

With a blurred economic outlook in the corner and the ravaging COVID-19 onslaught hitting record highs, financial traders, including forex traders around the globe are repositioning for opportunities.

It should be noted that the currency market is by far the largest financial market in terms of liquidity, value, and turnover. It looks to be on the rise, as remote trading takes shape.

READ: Crude oil prices post more than 10% losses in 2 weeks

In 2016, the currency industry was valued at $1.934 quadrillion dollars, with forex trading turning over $5.1 trillion daily. In 2019, it was estimated to be worth a staggering $2.409 quadrillion dollars, with a daily turnover of $6.6 trillion.

According to the Bank for International Settlements, and buttressed by data from Bloomberg News, currency trading volume in the global foreign-exchange market has jumped to the highest-ever level at $6.6 trillion.

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As the COVID-19 crisis continues to disrupt economic activities at unprecedented levels for traders and banks;  Nairametrics considers it pertinent to empower its readers on the best way to position, and take advantage of the volatility, as it is bound to trigger potential opportunities.

READ: U.S dollar drops lower, as U.S Federal Reserve plans on boosting inflation

Uche Paragon, Head of Education, CCI Trading Africa, in a recent interactive session, witnessed by Nairametrics, spoke on the critical steps a forex trader must take to become successful.

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He said, “There are no universal rules in trading forex per se, what is really important is that you define the strategy, and the platform you use in trading,”

On strategy, He highlighted on traders sticking to a particular strategy, for example, focusing on a tested indicator on a currency pair in a given market, coupled with avoiding platforms exposed to high slippage and trading manipulation by certain forex brokers, especially most of the non-ECN brokers.

READ: DeFi crypto market value gains over 1000% from June

Also,Uche Paragon gave the importance of the use in Research trading tool, study techniques and how they can be implemented in your strategy. Study how the market behaves and learn how the trading industry works.

In a detailed explanatory note, Adegbotolu Kehinde Erastus, Research and Market Analyst, Scope Markets, gave detailed insights on the endless opportunities of the forex market saying;

“With Nigeria’s population presently standing at over 200 million, comprising of vibrant youths who are mostly unemployed, forex trading has become a legitimate way for them to earn money at their fingertips, and also it has become a way to earn passive income for the employed populace. Brokers now support their clients with lots of educational material on Forex trading

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READ: S&P 500 futures suffer longest run of losses since February

“So, one doesn’t necessarily need to have an educational background about the financial markets, everything from the basics to the advanced, trading strategies are all available with the broker any client wishes to register with. One of the advantages of forex trading is that a trader can profit under any market condition.

“Even when the market is rising or falling with very good trading strategies, you can make very good profits, and because the financial market is available for 24 hours from Monday to Friday, with different market sessions, profitable trading opportunities do not cease. Even when COVID-19 put all commercial activities to a halt, the Forex market was still very active with traders making profits.”

Finally, it’s critical to observe that though currency trading often brings substantial profits, it is important to note that the leverage offered to forex traders, comes with a high risk of losing your capital.

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Currencies

U.S dollar is king, hits two months high

Amid rising COVID-19 caseloads and other militating factors, the greenback recently surged high.

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The US dollar remains king, U.S dollar gains against major currencies, America threatens China with sanctions., U.S dollar slumps against major currencies, investors become optimistic about global demand, U.S Dollar Stands Firm, Foreign Exchange Traders Remain Neutral 

The U.S dollar surges past fresh two-month highs at the last trading day of the week.

In addition to the impressive run, the safe-haven currency is set to finish this month with its biggest weekly increase since March as traders flock to the greenback for refuge amid rising COVID-19 caseloads and lingering passage of the U.S stimulus bill.

  • The U.S. dollar index, which tracks the greenback against a trade-weighted basket of major currencies, rose by 0.25%, to trade at 94.627. The last time it traded at that level was 19th of July 2020.
  • Elsewhere, the greenback was also supported by weaknesses in the euro and Brtish pound as the second wave of Covid-19 onslaughts rattled the mind of investors

READ: Why Ripple might be the future of digital payments

Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics gave keynotes on the strength of the world’s most favored safe haven at the moment, by saying;

“US dollar demand resurfaced as the New York session got underway, with virtually all currencies, local and G-10, slipping again as another wave of de-risking perhaps ensued.

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“Any dollar pulls back in Asia were faded, suggesting we’re still on the path of least resistance higher of the Greenback. The market remains completely downcast by the drip-feed of unflattering events.”

READ: Ripple’s chairman transfers 500,000,000 XRP

Quick fact:

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  • The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc.
  • Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay fewer dollars in fulfilling such payment obligations.

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Market Views

Apple, Microsoft gain over 1%, propels Nasdaq up

Apple and Microsoft shares rose 1% and 1.3%, respectively, to lead tech higher.

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Apple, Microsoft gain over 1%, propels Nasdaq up

U.S tech Stocks gained higher as leading tech brands stocks that include Apple and Microsoft witnessed buying pressures significantly.

Apple and Microsoft shares rose 1% and 1.3%, respectively, to lead tech higher. Alphabet shares gained nearly 1% and Amazon advanced 0.7%. Netflix was up 0.5% and Facebook advanced 0.2%.

The Dow Jones gained 0.2%, to settle at 26,815.44. At its session low, the Dow was down 226 points. The S&P 500 rallied up by 0.3% to 3,246.59 and the Nasdaq composite advanced 0.4% to 10,672.27.

The bullish run, however, was kept in check, as first-time claims for state unemployment benefits totaled 870,000 for the week ended Sept. 19

While investors wait for the passage of the U.S stimulus package lingering at the U.S capitol, Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics spoke on price movements in notable tech stocks, like Apple

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Before the street started to pick up on the more favorable stimulus overtones US equities had been climbing steadily since the open with Tech and pockets within Cyclicals/Value leading the way midday. Apple is again setting the tone for Tech. Defensives outperformed out of the gate, although the last leg up seems more Cyclical and Value-driven. Many folks think this market cannot run without Financials, so with Financials acting better and Tech finding support, one could easily make a case for a low-volume melt-up in the near term,” he said.

However, it’s critical to note that stock traders, global investors are having a tough time in September, with the major equity benchmarks falling momentarily as tech shares lose steam.

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