By Joy Baba-Yesufu
Dangote Cement Plc has officially launched its first tranche of a bond offer, aiming to raise up to N100 billion under a broader N300 billion multi-instrument issuance program. This bond issuance is set to close on Friday, November 22, 2024.
The company’s Board of Directors has approved the utilization of these funds for medium to long-term debt financing which proceeds will be directed towards refinancing existing debt obligations and enhancing working capital.
For the nine-month period ending September 30, 2024, Dangote Cement reported impressive results, achieving N2.5 trillion in revenue, primarily driven by increased local sales.
As Sub-Saharan Africa’s foremost cement producer, Dangote Cement boasts a manufacturing capacity of 52 million tonnes annually, with 35.3 million tonnes produced in Nigeria across its operations in ten African nations.
The company is fully integrated “quarry-to-customer” structure streamlines its production, sales, and distribution processes, significantly reducing Nigeria’s dependency on cement imports and turning it into an exporting nation.
The company’s revenue saw a substantial growth of 69.1 percent, increasing from N1.5 trillion in the same period last year, bolstered by a 9.5 percent rise in Nigeria sales volumes, notwithstanding a 1.6 percent decline in Pan-African market sales.
“Our financial results for the nine months demonstrate superior performance across key metrics as we execute our strategic priorities for the year. Group volumes grew by 1.9 percent year-on-year to 20.7 million tonnes, a significant recovery attributed mainly to our Nigerian operations,” stated Arvind Pathak, Chief Executive Officer of Dangote Cement.
The after-tax profit increased modestly by 0.55 percent, reaching N279.09 billion from N277.5 billion. Notably:
– EBITDA in Nigeria surged by 37.25 percent to N506.11 billion.
– EBITDA in Pan-African regions rose by 45.35 percent to N170.01 billion.
Despite the revenue growth, cost of sales jumped by 92 percent to N1.2 trillion, up from N642 billion a year earlier. Overall EBITDA increased by 37.10 percent, reaching N908.69 billion as of September 2024.
“Otherwise, out there in the global market, everybody buys Nigerian crude and blends it with dirtier crude to process, a lot of you will confirm this.
“So, no one takes Nigerian crude except one or two refineries that I know. Straight processing of Nigerian crude, nobody does this, because you do have a gap in value if you do this.
“Therefore, as a country, and I believe this strongly also, that we must process all the crude that we produce in the country to the optimum.
“You can do intermediate products and sell to the market, you are still adding value. You don’t have to sell gasoline that is coming from Nigerian production.
“You can do something different so you can process it domestically, but it’s going to be high quality. As we all know and it’s very clear in the media that we are selling high-quality products, that’s very true but you need not do this.
“You are driving a Keke-Napep and you want Lamborghini fuel, you do not need it. So, the quality issue is a relative thing, it’s by geography, by location, and we will do everything possible to make sure that we domesticate this.”
Kyari also denied claims that the company did not want to sell crude to Dangote in naira in attempt to sabotage the refinery.
“There are too many claimants out there, that the NNPC does not want to sell crude to the refinery in naira as a form of sabotage. Far from it!” he said.
“It makes no difference to us because if you sell crude to the domestic refinery in naira and you buy the product in naira from the domestic refinery, it’s a net zero gain. You lose nothing, you probably gain nothing.
“Otherwise, whatever you do, you still have to source foreign exchange to import if you have to import.
“So, if you stop the import and sell in naira, what you are simply doing is just a substitution. It’s a settlement platform and we must commend the President for bringing this initiative.
“What it will do to our country is that the biggest source of FX pressure in our country is the import of PMS. It’s the highest value.
“That means if you can take that under control, it means that speculation around the naira to the extent of those FX that is required for domestic product supply will be eliminated.
“That means speculation will go, you would have controlled inflation, and you would have controlled the FX pressure because we would have settled the exchange rate for 50 percent of your imports. This is a very great initiative.”
He also said Tinubu should be commended for developing such an initiative.
