Michel Pucheros, Chief Executive Officer of Dangote Cement, has disclosed that the strong appetite for real estate investment and the recovery of infrastructure spending by the government led to a 40% increase in the sales volume of the leading cement maker in Nigeria.
This statement was made by Mr Pucheros today on the Group’s website, after its third-quarter result was released today.
He reiterated that despite a challenging Q2, Dangote cement reached a record high EBITDA margin of 24% in the third quarter of 2020, and a Group net profit of N82 billion, which is 135.1% higher than the profit reported by the Group in the third quarter of 2019.
Pucheros disclosed that the impressive performance in the third quarter of 2020, despite an unimpressive second-quarter, was owed largely to the strong recovery of the cement market in Nigeria and Pan-Africa.
What they are saying
“I am delighted to report that Dangote Cement experienced its strongest quarter in terms of EBITDA and strongest third quarter in term of volumes. Despite a challenging environment, Group volumes for the nine months were up 6.6% and Group EBITDA was up 17.1%, at a 46.6% margin.”
He gave more insights into the performance of the cement maker ion the third quarter.
“This quarter has really shown the ability of Dangote Cement to meet the strong recovery of the cement market in Nigeria and Pan-Africa after a challenging Q2. In Nigeria, we have witnessed a strong appetite for real estate investment and the recovery of infrastructure spending – including more concrete roads.
“Sales volumes in Nigeria were up 40% in the quarter and Pan-Africa reached a record high EBITDA margin of 24% in the quarter. In the quarter, our Group net profit was up 135.1%,” he said.
Dangote Cement given approval to export through land borders
Dangote Cement the approval by the Federal Government to export cement to West African countries through Nigeria’s land borders.
The Nigerian government has given Dangote Cement the approval to export Cement to West Africa through Nigeria’s land borders, which have been closed for over a year. The cement manufacturer is the only company given such approval to export across the borders.
This was disclosed in a report by Bloomberg on Monday evening after an investor call by Michel Puchercos, Dangote Cement CEO.
What you should know
Nairametrics reported in October 2019 that the Federal Government of Nigeria ordered the complete closure of the Nigerian border, placing a ban on both legitimate and illegitimate movement of goods in and out of the country.
The Comptroller-General, Nigerian Customs Service, retired Col. Hameed Ali said all import and export of goods from the nation’s land borders are banned until there is an agreement with neighboring countries on the kind of goods that should enter and exit Nigeria.
In December 2019, RenCap, an investment and securities firm declared that the closure of Nigeria’s land borders could lead to a slow-down in Nigeria’s economic growth in 2020.
Nigeria’s trade sector is about the second largest contributor to Nigeria’s GDP but has suffered from poor economic growth since Nigeria’s economic crisis began in late 2014. “We believe the border closures contributed to the decline in wholesale and retail trade in 3Q19,” RenCap said.
Dangote Chief, Pucheros, said the cement exports were made through “authorization given by this administration,” allowing Africa’s largest cement company to export to Niger and Togo during the 3rd quarter of the year.
He added that the volumes allowed for export were restricted and the Company group plans to export through seaports.
The exemption to Dangote Cement is seen as a softening of the government’s position on a border closure that started in August last year, and could open the way for other businesses to fully resume exports across the country’s land barriers.
Why this matters
Dangote Group’s $2 billion fertilizer plant to start operations in December 2020
Dangote Group has announced that its fertilizer plant will commence operations before the end of December.
The Dangote Group has announced that its $2 billion Granulated urea fertilizer plant which is located at Ibeju Lekki, Lagos state, will start operations before the end of December.
This disclosure was made by the Group Head, Corporate Communications, Dangote Group, Mr. Anthony Chiejina, during a chat with the News Agency of Nigeria (NAN) on Wednesday, November 4, 2020, in Lagos state.
Mr. Anthony Chiejina, in his statement, said, “The granulated Urea fertilizer plant project will be ready for take-off before the end of December. The pre-testing has already been done and the delay in starting operations was due to the COVID-19 pandemic.”
The take-off of the fertilizer plant, which is reputed to be the largest in the world, with its 3 million tonnes per annum capacity, had suffered some setbacks with the opening date leading to its postponement a few times.
Nairametrics had reported that earlier in the year, Aliko Dangote, the Chief Executive Officer of Dangote Group, had projected that the plant would begin operations in May 2020.
During the visit of the CBN Governor, Godwin Emefiele, to the facility, Dangote said that the pre-testing of the plant had already begun. He also said that the plant would make Nigeria the only Urea exporting country in Sub-Saharan Africa.
Further stressing that the fertilizer and the petrochemical plants, which are in the same vicinity could generate $2.5 billion annually, which according to him, an amount that is almost 10% of what Nigeria is getting from home remittances, which is one of the highest in the world.
Lafarge Africa redoubles environmental commitment amid rebound in sales
..Invests 7.3 million Swiss Francs to curb dust emissions.
Lafarge Africa Plc is investing 7.3 million swiss francs to modernize production facilities at its Ewekoro plant. This is part of ongoing efforts to build on its current credential as an environmentally friendly and sustainable company while maintaining a drive for strong financial performance in a tough year.
Country Chief Executive Officer, Khaled El Dokani, said in an interview that the upgrade of the plant, which will require a production stoppage for six months, will eliminate almost completely, dust emissions from the production line. LafargeHolcim, the world’s biggest building materials company, is a leader in the drive to reduce dust emissions, often a byproduct of cement manufacturing.
”At Lafarge, we always take the decisions that serve the environment and our host community best, even though it comes at significant cost,” El Dokani said. To compensate for the production stoppage on the Ewekoro line, El Dokani explained that the company will increase production on other lines. Other lines still in operation will ramp up output having been upgraded in preceding years.
Nigeria’s second largest cement maker recently reported a rebound in third quarter sales after strict lockdown instituted by the federal and state governments depressed revenues in the second quarter. Sales for the three months up to September 2020 was N59.3 billion, up from N56.9 billion in the second quarter, but still lower than the N63.6 billion recorded in the first quarter.
However, while striving to deliver a decent financial performance, the CCEO emphasised that the focus of the company on further setting the precedence in environmental leadership in Nigeria remains a top priority.
He cited the increasing usage of biomass, including oil palm and rice husks, as alternative fuels to power its plants. Most cement plants in Nigeria are powered by coal, gas or low pour fuel oil. Alternative fuels are considered cleaner, more sustainable, and also help surrounding communities dispose of waste more efficiently.
El Dokani said that alternative fuels currently account for up to 40 percent of fuel used to power its Ewekoro plant and the company’s target is to have all plants operating on at least 35 percent alternative fuels by 2023. This transition also offers significant financial benefits.” Based on the current price of gas and coal, the upgrade of our plants (to use alternative fuel) could lead to a 30 percent reduction in our fuel cost”.
Lafarge is also eyeing the construction of concrete roads and affordable housing as key areas to not only diversify from its core cement production business but to further make a positive impact on the environment. “We have signed a memorandum of understanding to execute a 20-kilometer road project in Cross Rivers State as a sustainable solution given the weather conditions in the area,” said El Dokani. He cited the swampy topography of the Southern Nigeria state as unsuitable for asphalt roads and therefore justifies the use of concrete to pave roads. While asphalt paving generally costs less than concrete paving, concrete roads are considered more durable and more environmentally friendly as compared to asphalt roads.
In addition, the company is exploring the affordable housing space for a sound business model that can catalyse its direct involvement in construction, the CCEO said.
Lafarge Africa’s focus on sustainability and the environment is consistent with the Circular Economy principles of LafargeHolcim, its Swiss parent company, on responsible stewardship. According to El Dokani, the Swiss multinational building materials group is the first global building solutions company to sign the “Business Ambition for 1.5°C” pledge with intermediate targets approved by the Science-Based Targets initiative (SBTi), an initiative that champions science-based target setting as a way of boosting companies’ competitive advantage in the transition to the low-carbon economy. Under its SBTi commitment, LafargeHolcim has lowered its target for CO2 intensity in cement to 475kg net CO2 per ton of cementitious material (net CO2/t.cem.) by 2030.
El Dokani mentioned that LafargeHolcim, through its responsible behaviour, commitment to global best practice and adoption of best in class technologies will remain a world leader in delivering infrastructure solutions in an environmentally friendly manner.