One of Africa’s foremost cement producers, Dangote Cement, is to officially open its 1.5million metric tonnes per annum capacity plant in Congo on Thursday.
Built at a conservative cost of $500 million, the Plant is expected to directly employ more than 1000 people as thousands of indirect jobs will also be created.
The cement plant which is now the largest in Congo rolled out its first bag of cement on the 7th of August, 2017. The Congo Plant commissioning will bring the total of Dangote Cement fully operational Plants to 10 across Africa.
The company’s third quarter unaudited results showed that the Congo plant which recently began operations has almost doubled the size of the cement sector in the country.
In the overall, Dangote Cement maintained its strong hold in the domestic cement market accounting for 65 percent of the Nigerian cement market while Pan-African volumes went up by 7.5 percent to 7.0 mta.
An analysis of the results indicated that the company recorded strong volumes in Senegal, Ethiopia and Cameroon. In the nine months under review, the 1.5 mta clinker grinding facility in Douala Cameroon sold approximately 938 kt of cement, indicating an increase of 16.4 percent on the 806 kt sold the same period in 2016.
The company attributes the increase in sales to a number of factors ranging from strong brand recognition, increased point of sales branding, improvements in sales and marketing strategies to higher visibility through trade shows. Dangote Cement Ethiopia increased sales by 16.8 percent to nearly 1.7 mta in the first nine months of 2017 representing capacity utilization of approximately 88 percent.
The cement plant in Pout Senegal sold 1.0mta of cement in the period under review, up by 21.7 percent on the comparable period of 2016. This represents almost 89 percent capacity utilization at the factory.
The company stated that: “Our Pan-African operations are performing strongly with excellent sales growth in Cameroon, Ethiopia and Senegal. We are consolidating our success across Africa and have just commissioned our 1.5Mta factory in Congo, the tenth country in which we have established operations. In our key operations in Nigeria we have significantly improved our fuel mix and this has helped increase margins across the Group.
“It is especially good for Nigeria because most of the coal we are using is mined in our own country”. It would be recalled that top rating agencies, Moody’s Investors Service(Moody’) and Global Credit Ratings recently scored Dangote Cement high marks in their recent published ratings assigning a stable outlook to the foremost cement conglomerate.
“Moody’s assigned a first-time Ba3 corporate family rating (CFR), Ba3-PD probability of default rating and Aaa.ng national scale rating (NSR) corporate family rating to Dangote Cement Plc (DCP), with the outlook on the ratings as stable while Global Credit Ratings accorded initial long term and short term national scale issuer ratings of AA+(NG) and A1+(NG) respectively, to Dangote Cement Plc, with the outlook accorded as Stable.”
Speaking on the rating, Douglas Rowlings, Vice President and lead analyst for Dangote Cement Plc at Moody’s said, “Dangote Cement Plc’s Ba3 corporate family rating, one-notch above the Government of Nigeria’s rating, reflects the company’s strong standalone credit profile and track record of demonstrated financial support from a larger and more diversified parent, Dangote Industries Limited.”
He added that the ratings factor in the diversification of the company’s revenue streams as DCP’s new cement production plants are commissioned in Africa with Pan-African volumes expected to reach 40 percent of total sales volumes by 2020.
According to Moody’s, DCP’s Ba3 CFR and Ba3-PD probability of default rating reflect its strong financial profile, which factors high operating margins trending above 50 percent, low leverage as measured by debt/EBITDA trending below 1.0x over the next 18 months and high interest coverage as measured by EBIT/interest expense trending above 8x over the next 18 months.
Other factors which contributed to the rating include; conservative funding policies with debt funding matched to the currency of cash flow generation and prudent financial policies which will ensure sustenance of strong credit metrics through operating and project build cycles; and the additional parent level financial strength afforded by being part of a broader diversified group of companies under the Dangote Industries Limited (DIL) umbrella.
Global Credit Ratings (GCR) credit ratings on Dangote Cement were based on the fact that DCP is one of Africa’s leading integrated cement companies.