With operations in 10 African countries, Dangote Cement Plc, a subsidiary of the Dangote Industries Limited continues to dominate in the cement sector in Africa.
Apart from its Nigerian operations witnessing a rebound in the first quarter of 2024, pan-Africa operations continued an upward trajectory, with volumes up 3.1 percent to 2.7Mt, buoyed by increased sales in Zambia and Congo.
Background
Dangote Cement is a subsidiary of Dangote Industries founded by Aliko Dangote in 1981 as a trading business with an initial focus on importation of bagged cement.
Over time, the Group began to import bulk cement into the Apapa and Port Harcourt terminals, which it then bagged for distribution.
Through the 1990s, the Group made a strategic decision to transition from a trading based business into a fully-fledged integrated manufacturing operation. This is where its ambitious plan to become Africa’s leading cement producer began.
Dangote Industries acquired Benue Cement Company from the Federal Government as part of its privatisation exercise. BCC operated a 0.9Mta plant in Gboko, which was subsequently upgraded by the Group to 2.8Mta.
The Group later commenced the construction of the Company’s first cement production plant (Obajana Cement Plant). DCP was listed on the Nigerian Stock Exchange following the merger of DCP and BCC.
Dangote Cement Plc has since emerged as Sub-Saharan Africa’s leading cement company, with a production capacity of 520 million tonnes per year.
Board/Management
The board of DCP consists of five independent members, 21 percent female board representation from six different nationalities.
Aliko Dangote is the Chairman of the Board of Directors, Dangote Cement Plc. He is the founder and President/ Chief Executive of Dangote Industries Limited, primary holding company of the largest conglomerate in West Africa.
A graduate of Business Studies from Al-Azhar University in Cairo, Egypt, he started business in 1978 trading in commodities, before he ventured into full-scale manufacturing. He has been conferred several Honorary Doctorate degrees from various prestigious Universities across the globe, including Coventry University in the United Kingdom (2016), University of Ibadan in Nigeria (2016), and Ahmadu Bello University (2019).
He is well known for his philanthropic engagements in local and international initiatives via the Aliko Dangote Foundation; committed to improving healthcare, education, and social wellbeing. In addition, he sits on the boards of notable international bodies involved in global economic growth, sustainable development, and healthcare initiatives.
Arvind Pathak is the Group Managing Director of Dangote Cement Plc. He boasts of more than 36 years’ experience in the cement industry. Mr Pathak is an experienced business leader who worked as MD and CEO of Birla Corporation Ltd before this appointment.
Financials
Strategies adopted by Dangote Cement to increase sales and ensure an adequate supply of products to customers yielded the desired results as domestic sales volume increased, by 26.1 percent to 4.6Mt in the first quarter of 2024.
According to the cement manufacturers’ unaudited results for the three months that ended, on April 30, 2024, the Nigerian operations volume rose significantly and positively affected the rise in the Group’s overall volume to 7.0 Mt.
The company recorded Group revenue of N817.4 billion, even as profit after tax inches, up by 2.9 percent to N112.7 billion. Earnings per share closed the quarter at N6.68 representing an increase of 3.7 percent. As part of its sustainability programme, Dangote Cement commissioned ten of the 17 Alternative Fuel Projects across the Group.
Group revenue more than doubled to N817.4 billion, while Group EBITDA rose 66.6 percent to N309.5 billion. Profit After Tax was up 2.9 percent at ₦112.7 billion. Dangote Cement achieved double-digit growth in revenue of N2,208.1 billion, while Group EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) reached a record high of N886.1 billion, increasing by 25.1 percent.
Chief Executive Officer of Dangote Cement, Arvind Pathak, in his comments on the results, said, “Driven by an uptick in economic activities, our Nigerian operations witnessed a strong rebound, with volumes up 26.1 percent to 4.6Mt in the quarter. Similarly, our pan-Africa operations continued an upward trajectory, with volumes up 3.1 percent to 2.7Mt, buoyed by increased sales in Zambia and Congo. Despite elevated cost pressures, increased borrowing costs, and a further currency weakening, our first-quarter results reflect our commitment to navigating challenges effectively.”
“During the quarter, we intensified our emphasis on exports, dispatching 7 ships from Nigeria to Ghana and Cameroon. As a result, our Nigerian exports surged by 87.2 percent, reflecting our commitment to expanding our presence in regional markets and capitalising on our export-to-import strategy.
“We continue to prioritise innovation, cleaner energy transition, and cost leadership towards achieving our vision of transforming Africa and building a sustainable future.”
“Dangote Cement Plc has since emerged as Sub-Saharan Africa’s leading cement company, with a production capacity of 520 million tonnes per year”
Dangote Cement is Africa’s leading cement producer with 52.0Mta capacity across Africa. A fully integrated quarry-to-customer producer, Dangote Cement has a production capacity of 35.25Mta in Nigeria.
Obajana plant in Kogi state, Nigeria, is the largest in Africa with 16.25Mta of capacity across five lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta; Gboko plant in Benue state has 4Mta; and Okpella plant in Edo state has 3Mta.
Through recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into an exporter of cement serving neighbouring countries.
In addition, the company has operations in Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (2.0Mta clinker grinding and import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.5Mta import), South Africa (2.8Mta), Tanzania (3.0Mta), Zambia (1.5Mta).
Dividend payout
DCP has upheld its policy of robust reward to shareholders over the years. For the financial year ended December 31, 2023, DCP increased shareholders dividend by 50 percent to N30 per share. The company paid a dividend of N20 per share in the financial year ended 2022.
Cost management strategies
As part of its plans to reduce the cost of doing business and further delivering better dividend to its shareholders, DCP revealed that arrangements are in top gear for thousands of the Company’s delivery trucks to henceforth run on Compressed Natural Gas in line with the Federal Government agenda on adoption of alternative fuel for official vehicles.
“By the end of next year, all our trucks that are operating in the company will be running on CNG, and that is a whole lot of money that we are going to invest. But we are equal to the task, and we will continue to push and make sure that we continue to make our shareholders happy,” Dangote informed shareholders at the company’s AGM held in May.
The Chairman also disclosed to the shareholders the Company’s ongoing efforts at ramping up production with the ongoing construction of a new plant of 6 million metric tonnes per annum at Itori, in Ewekoro local government area of Ogun State, noting that despite the hiccups at the Apapa Port in Lagos, the plant would be completed to time.
Corporate Social Responsibilities
DCP has a commitment to working with local communities to create jobs, procure local products and services while providing other essential benefits such as roads, water and healthcare
Recently, the Group launched his food intervention programme in Kano, On Saturday, The food intervention programme, which will cost his foundation, (Aliko Dangote Foundation ADF), close to N15 billion, started with the distribution of over one million bags of 10kg bags across the 774 local government areas of the 36 states and FCT in Nigeria.
Speaking at the official flag-off of the intervention programme, Dangote said the initiative is a crucial step towards alleviating the ongoing economic challenges faced by our nation.
No fewer than 305 youths from the Dangote Cement Ibese plant’s 17 host communities have so far been trained and empowered with multi-million Naira start-up packs in different vocations since the commencement of operations by the Cement Company in Ibese, the Company management has disclosed.
In recognition of the gesture, the Ogun State government lauded the efforts of Dangote Cement in complementing the state’s poverty alleviation programmes describing the company as a worthy partner.
Green Flags
1. Aggressive business expansion plan
2. Robust corporate social responsibility culture
3. Good dividend policy
Red Flags
1. Rising cost of production
2. Increasing industry competition.
