COMPANY PERFORMANCE: Dangote Cement’s unquenchable appetite for market expansion

Dangote Cement plant in Obajana …

 Success, they say, is never an orphan considering that success begets greater success.  Dangote Cement is a subsidiary of Dangote Industries, which was founded by Aliko Dangote in 1981 as a trading business with an initial focus on importation of bagged cement and other commodities such as rice, sugar, flour, salt and fish. Forty years down the line and with much efforts and continuous realignment in the areas of business strategies leading to optimization of financial and human resources, Dangote Cement has sprout out as perhaps the biggest and most successful business entity in the whole of Africa.

But when under its N300 billion multi-instrument issuance programme Dangote Cement Plc  recently announced the successful issuance of 50 billion Series 1 Fixed Rate Senior Unsecured Bonds, most financial analysts are curious as to what Dangote Cement which is already Africa’s largest cement producer wants to achieve again.

It is a statement of fact that Dangote Cement Plc is Sub-Saharan Africa’s leading cement company, with a production capacity of 48.6 million tonnes per year across 10 countries. These operations make Dangote Cement the largest cement producer in Sub-Saharan Africa.  It is therefore not surprising that Dangote Cement’s share price at the Nigerian Stock Exchange is soaring by the day with a 50 kobo unit share trading at over N230 per share thus making the company’s share one of the most sort-after by both local and foreign investors.

If the success which followed Dangote Cement’s issuance of 50 billion Series 1 Fixed Rate Senior Unsecured Bonds is anything to hold onto, It will be logical to conclude that the cement company have many more heights to attain since all its stakeholders are confidently matching along with the company.

Come to think about it. Despite market headwinds, Dangote Cement’s bond issuance was well received and recorded participation from a wide range of investors including domestic pension funds, asset managers, insurance companies and high net-worth investors. The proceeds of the bond issuance, it has been announced, would  be deployed for the company’s expansion projects, short-term debt refinancing and working capital requirements. The bonds  which were issued on May 26, 2021 was at coupon rates of 11.25%, 12.50% and 13.50% for the three, 5five and seven-year tranches respectively.

It was reliably gathered that side from this first issuance of a traditional bond under the new Multi-Instruments Programme, Dangote Cement has registered a programme enabling it to consider different types of fixed income instruments to cater for different type of investors.

A statement from Dangote Cement’s Deputy Company Secretary, Mr. Edward Imoedemhe in Lagos quoted the Dangote Cement Chief Executive Officer, Michel Puchercos  saying that  the ability to issue Green Bonds and Sukuk will enable the company leverage the depth and breadth of the Nigerian market.

“This bond issuance allows us move a step further in achieving our expansion objectives and will be deployed to projects instrumental in supporting our export strategy while improving our cost competitiveness. We thank the investor community for their continued support in the management of Dangote Cement and their successful participation in the bond issuance”, he said.

The Bonds which is expected to be listed on the Nigerian Exchange Limited and FMDQ Securities Exchange, according the Company has Absa Capital Markets Nigeria acting as Lead Issuing House for the Series 1 Bonds.

Reputable financial houses in Nigeria are already partnering Dangote Cement on this journey of business expansion. Stanbic IBTC Capital, Standard Chartered Capital & Advisory Nigeria Limited, United Capital Plc, FBN Quest Merchant Bank, FCMB Capital Markets, Coronation Merchant Bank, Ecobank Development Corporation Nigeria, Futureview Financial Services, Meristem Capital Limited, Rand Merchant Bank, Quantum Zenith Capital and Vetiva Capital Management are the Joint Issuing Houses.

Dangote Cement Plc is Sub-Saharan Africa’s largest cement producer with an installed capacity of 48.6Mta capacity across 10 African countries. It operates a fully integrated “quarry-to-customer” business with activities covering manufacturing, sales and distribution of cement. We have a production capacity of 32.3Mta in our home market, Nigeria.

Its Obajana plant in Kogi State is the largest in Africa with 16.3Mta of capacity across four lines; our Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta, and our Gboko plant in Benue state has 4Mta.

The cheering news is that Dangote Cement PLC., through its current investment, has removed Nigeria’s dependence on imported cement. It has transformed the nation into an exporter of cement serving neighboring countries. In addition, we have operations in Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (1.5Mta import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.5Mta import), South Africa (2.8Mta), Tanzania (3.0Mta), Zambia (1.5Mta).

As a measure of the company’s strength and financial stability, Dangote Cement PLC has achieved a long-term credit rating of AAA by GCR and Aa2.ng by Moody’s due to its market-leading position, significant operational scale, and strong financial profile evidenced by the company’s robust operating and net profit margins relative to regional and global peers, adequate working capital,  good cashflow, and low leverage.

With Africa’s richest man Alhaji Aliko Dangote sitting atop the company’s board as chairman, the board of Dangote Cement is said to have over 450 years of experience between them. 

The board has continued to reiterate and indeed forcus more on the company’s vision for the West and Central Africa to become cement and clinker self-sufficient, with Nigeria being the main export hub. This will no doubt notably contribute to the improvement of regional trade within the ECOWAS region and beyond with the African Continental Free Trade Area. Nigeria can serve a potential market of 15 countries.

Following the commissioning of Dangote’s Apapa and Onne export terminals in 2020, the company has commenced shipment of clinker from Nigeria to West and Central Africa.

Dangote is strongly pursuing it mission which is, among others, to deliver strong returns to its shareholders by selling high-quality products at affordable prices, backed by excellent customer service as well as to help Nigeria and other African countries towards self-reliance and self-sufficiency in the production of the world’s most basic commodity, by establishing efficient production facilities in strategic locations close to key growth markets.

Not wanting to be hostile to its host communities, Dangote Cement strives to provide economic benefits to local communities, by establishing efficient production facilities in strategic locations close to key growth markets. To provide economic benefits to local communities by way of direct and indirect employment in all countries in which we operate.“We thrive on being leaders in our business, markets and communities. To drive this we focus on continuous improvement, partnership and professionalism”, Dangote Cement Chief Executive Officer, Michel Puchercos  had reiterated prompting the big question among analysts as to what Aliko Dangote and his cement company want.