Mixed half-year results for Dangote Cement

Dangote is Africa’s leading cement producer with nearly 46 million tonnes capacity across 10 countries. Nigeria is the firm’s flagship market. PHOTO | FILE | NATION MEDIA GROUP Dangote Cement, Africa’s largest cement manufacturer, continued to experience a slowdown in performance at home in Nigeria and other key African markets such as Ethiopia and South Africa in the first half of this year, but recorded remarkable improvement in Tanzania.

The group’s half-year revenues declined by three per cent to $1.2 billion from $1.3 billion during the same period in 2018, largely blamed on lower volumes and net average prices in Nigeria.

The cement maker’s pan-African operations posted a 2.7 per cent rise in sales to 4.7 million tonnes, up from 4.6 million tonnes over the same period in 2018. The total pan-African volumes represented 38.2 per cent of group sales volumes.

But the group operating profit declined by 15 per cent to $464.6 million, from $546.5 million in 2018, due to the depreciation of the Nigerian naira.

“Our variable costs continue to be affected by foreign exchange effects as well as higher fuel and distribution costs,” said Dangote Group chief executive Joe Makoju.

Dangote, however, tripled its market share in Tanzania to 22 per cent from seven per cent last year, after resolving operational challenges that resulted in a significant rise in sales.

The company is emerging as a key beneficiary of the fall of some of its regional competitors such as ARM Cement (Athi River Mining) and Tanzania’s move to block cement imports from Kenya, over contentions on the source of raw materials used in its manufacturing.

In Tanzania, Dangote Cement, which in September 2018 started running its Mtwara plant on gas instead of coal, posted a 172 per cent rise in cement sales to 543,000 tonnes in the first half of 2019 compared with 200,000 tonnes in the same period last year.

“We saw a stronger performance in Tanzania, which is now running on gas turbines. Our higher volumes were supported by higher prices across the market as demand rose across the country, particularly the southern region,” said Mr Makoju.

The switch to gas was a significant turnaround in terms of saving costs and uninterrupted production, with uptake driven by the government’s vast investments in infrastructure projects that are driving construction activity. These include the Dar es Salaam-Morogoro railway, the Kenya-Tanzania railway, major road and bridge projects and commercial housing.

In the first half of 2018, Dangote […]

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