Dangote Cement Presents Facts Behind the Figures

An emerging cement major
building shareholder value
and prosperity in Africa
September 2014
Disclaimer
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2
At a glance
• Largest cement producer in Africa
– Leader in sub-Saharan Africa’s largest, most profitable market - Nigeria
– 29MTPA capacity across three state-of-the-art plants in Nigeria
– New capacity coming onstream across Africa in 2014-16
• Delivering superior financial and operating performance
– H1 2014 revenues of ₦208.9bn ($1,258m)
– H1 2014 EBITDA of ₦129.3bn ($813m) at 62% margin
– Net debt of ₦200.0bn, well below cement industry EV/EBITDA norms
• Massive expansion underway into sub-Saharan Africa
– On track to deliver more than 60MTPA integrated / grinding / import
capacity across 13 countries
– More than $5bn committed for expansion in 2012-16
– Current funding plan is 60% equity / 40% debt
• Largest company on Nigerian Stock Exchange
– Market capitalisation $24bn; ca. 30% of NSE
– A bellwether on the cement sector and on Africa’s growth
3
Investment summary
African megatrends driving
GDP growth are accelerating
consumption of cement
Attractive markets with high and
sustainable growth prospects
Clear strategy to become Africa’s
leading cement producer
High barriers create sustainable
competitive advantages
Visionary founder, management
depth, improving governance
Delivering outstanding financial
performance and strong returns
• Political stability and economic transformation sustaining 6% growth across the continent
• Population growth, younger demographic and rapid urbanisation driving housing, infrastructure
• Infrastructure improvements unlocking resources, agriculture, with strong multiplier effects
• High upside potential from low per-capita consumption as infrastructure and housing increase
• Strong and sustainable pricing with many markets in deficit or lacking limestone resources for cement
• Favourable investment climate in many African countries, with tax incentives / holidays
• Dominates Africa’s strongest and most profitable market, Nigeria, with 63% market share of sales FY13
• Using Nigeria as low-cost base to reach a third of Africa with clinker/bulk cement
• Investing more than $5bn across the region to build operations in 13 countries
• High capex required, many major producers burdened by large debts that hamper investment in Africa
• Highly technical operations, significant distribution relationships are an asset
• Long lead times on plants, availability of adequate limestone near to fuel and viable markets
• Founder backed by strength and depth in management team with decades of experience
• Improving governance and disclosure, IFRS compliant accounts in 2012
• Strong social/community programme via Dangote Foundation, substantial help for local communities
• $2.45bn sales in 2013 with strong growth expected as demand increases and new plants come online
• Excellent returns generated by high EBITDA - $1.45bn in FY 2013,
• FY 2013 results in Nigeria show upside potential on margins when gas supply improves
4
H1 2014 Performance
Operational
• Total Nigerian market volumes up 1.2% to 11.1mt
• Gas supply a constraining factor, compounded by LPFO shortages
• Dangote Cement Nigerian sales up 0.9% to 6.8mt
• Gboko sales up 63%
• Obajana sales down 6.0%
• Ibese sales down 4.8%
• Group cement sales up 0.3% to 7.1mt
• Direct sales strategy gaining popularity
• Launch of 3x brand of 42.5R cement (quicker setting)
Financial
•
•
•
•
•
Revenue up 5.3% to ₦208.9bn
Gross profit up 1.1% to ₦133.5bn, 63.9% gross margin
EBITDA up 1.6% to ₦129.3bn at 61.9% margin
EBIT up 0.8% ₦112.0bn
Earnings per share down 11.0% to ₦5.63
• Some Nigerian operations now taxable
• Net debt ₦200.0bn (after dividend payment of ₦119bn)
5
Revenues improve
Six months to
30 June
2013
(₦bn)
2014
(₦bn)
% change
Comments
Revenue
198.5
208.9
5.3%
Production constrained by disruption to gas supply
Cost of sales
(66.3)
(75.4)
13.6%
Increased fuel cost, higher % of Gboko in revenue mix
Gross profit
132.1
133.5
1.1%
Gross margin
66.6%
63.9%
EBITDA
127.3
129.3
EBITDA margin
64.1%
61.9%
EBIT
111.0
112.0
EBIT margin
56.0%
53.6%
Net interest
(3.4)
(4.9)
44.2%
Profit before tax
107.7
107.0
(0.6%)
Earnings per share
(naira)
6.33
5.63
1.6%
0.8%
Obajana 1+2 and Gboko now subject to taxation of profits
6
Strong balance sheet
Six months to 30 June
2013
(₦bn)
2014
(₦bn)
Non-current assets
695.1
777.6
Current assets
148.0
122.5
Total assets
843.2
900.0
Equity
550.1
527.0
Non-current liabilities
129.6
134.6
Current liabilities
163.5
238.4
Total equity & liabilities
843.2
900.0
Cash
70.5
36.2
Overdraft
(0.9)
(2.3)
Short-term debt
(55.4)
(104.8)
Long-term debt
(124.9)
(129.2)
Net cash (debt)
(110.6)
(200.0)
Comments
7
Strong cash flow and ratios
Six months to 30 June
2013
(₦bn)
2014
(₦bn)
Profit before tax
107.7
107.1
Net cash from operations
141.8
145.3
Investments
(83.3)
(117.2)
Financing
(60.0)
(70.9)
Increase in cash during year
(1.5)
(42.9)
Exchange rate effects
6.8
7.1
Cash at beginning of period
43.2
69.6
Cash at end of period
48.5
33.9
Six months to 30 June
2013
(₦bn)
2014
(₦bn)
EBITDA margin
64%
62%
PBT margin
54%
51%
PAT margin
54%
46%
Gearing (Net debt/equity)
24%
38%
Net debt / H1 EBITDA
0.9x
1.54x
Comments
Comments
Remains strong despite gas supply constraints
Obajana 1+2, Gboko now out of Pioneer Tax status
Not annualised
8
Operational summary
• Overall Group sales up 0.3% to 7.1mt
• Compared with exceptionally strong H1 2013
• Including Ghana and first sales from Sephaku
• Nigerian sales hit by fuel disruption
• Obajana sales down 6.0% to 3.8mt
• 69% gas utilisation, LPFO shortage at refinery level
• Coal mill being readied for Line 3 (September)
• Ibese sales down 4.8% to 1.9mt
• 94% gas utilisation but some days’ production affected
• Coal mill ready for Lines 1+2
• Gboko sales up 63% to 1.0mt
• Strong year-on-year growth after mothballing in January 2013
• But challenged by LPFO shortages – primary fuel
• Direct sales now more than half of dispatches
• Ghana volumes down to 170kt – currency impact
• Sephaku Cement begins production at Delmas
9
Towards fuel security
• Gas will remain primary fuel of choice despite problems in distribution
• Strategy is to reduce dependence on LPFO as back-up fuel
• Switch to cheaper coal to improve margins vs LPFO use
• Imported at first
• Locally mined in longer term
• $80m already invested in coal facilities at gas-fired plants
• Ibese 1+2 – ready for operations
• Obajana 3 – ready in September
• Further $300m being invested to enable 100% use of coal if necessary
• Obajana 1,2,4
• Ibese 3+4
• Gboko 1+2 (including switch to coal-fired power generation)
• Projects expected operational by end 2015
• DIL/DCP examining feasibility of mining coal near to Obajana, Gboko
• DIL keen to invest in oil/gas blocks
10
African expansion gains pace
• New Nigerian lines have started producing clinker/cement
• 2 x 3MTPA lines at Ibese
• 3MTPA line at Obajana
• Sephaku Cement already selling cement from Delmas
• Aganang integrated plant now producing clinker
• Zambia on track for opening in 2014
• Cameroon to begin operations soon
• Senegal plant commissioning has commenced
• Ethiopia will commence before the end of the year
• Sierra Leone will open in Q4 2014
• Reviewing scope of Kenya in light of finding good limestone deposits
• South Sudan on hold owing to conflict
11
Outlook for 2014
• Gas disruption expected to continue
• Coal facilities ready at Ibese 1+2, expected September at Obajana 3
• Investing $300m in additional coal facilities across all plants
• Mining operations planned longer term
• Also looking to acquire oil/gas blocks to help secure gas supplies
• FLSmidth assumes O&M responsibility for Ibese 1+2
• Expect to increase direct deliveries, gain share
• Focus on 42.5R strength cement as best for Nigeria
• Adding 52.5 strength for heavy load-bearing structures
• Nigeria average tax rate likely to be 10%-12% in 2014
• Obajana 1+2 and Gboko now out of Pioneer Tax status
• Capex of about $1bn for 2014
12
A roadmap for expansion
End 2013
End 2014
End 2017
20MTPA capacity
42MTPA capacity
62MTPA capacity
• Nigerian capacity increased to 20MTPA
which ramped up throughout the year
• Obajana 10.25MTPA
• Ibese
6MTPA
• Gboko
4MTPA
•
•
•
•
$2.45bn revenue
$1.45bn EBITDA, 59% margin
Net debt $693m; 0.48x EBITDA
Market share of 63% at end of year
• Work continuing on new Nigerian
capacity, anticipating strong market
growth
• Obajana +3MTPA by Q4 2014
• Ibese
+6MTPA by Q4 2014
• Work underway on African capacity
and import/export facilities
$2.45bn revenue
$1.45bn EBITDA
• Nigerian capacity increased to
29MTPA, strong market growth
anticipated
• Obajana 13MTPA
• Ibese
12MTPA
• Gboko
4MTPA
• Nigerian capacity 38MTPA
• Obajana
13MTPA
• Ibese
12MTPA
• Gboko
4MTPA
• Sagamu
6MTPA
• New Benue 3MTPA
2013 Highlights:
• $2.45bn revenue
• $1.45bn EBITDA, 59% margin
• Net debt $693m; 0.48x EBITDA
• Market share of 63% at end of year
• Large scale producer with superior
profitability and strong cash generation
• Work underway on African capacity to
be completed end 2014
• South Africa 4.2MTPA
• Ethiopia
2.5MTPA
• Zambia (1)
1.5MTPA
• Senegal
1.5MTPA
• Cameroon
1.5MTPA
• Sierra Leone 0.5MTPA
• Ghana
1.0MTPA
• Additional capacity across Africa
• Zambia (2)
1.5MTPA
• Tanzania
3.0MTPA
• Kenya
1.5MTPA
• Cote d’Ivoire
1.5MTPA
• Liberia
0.5MTPA
• Ghana Takoradi 1.5MTPA
• Congo Brazzaville 1.5MTPA
• Operations in 13 countries
• Trading operations in others
• Export strategies fully operational,
trading within Africa’s Trade Zones
• Operating in robust, growth markets
• Well-diversified regional exposure
• Leading Sub-Saharan African producer
13
The opportunity
Africa’s population
Urban
Rural
2,500
By 2050 the urban
population of Africa
will grow by an
estimated 865m
people.
That is 2.7x the
current population of
the United States.
2,000
927m
1,500
1,000
622m
500
1,265m
400m
0
2010
2050
Sources: United Nations World Urbanisation Prospects, 2012
14
Africa’s demand drivers
• Increasing political & economic stability
• Robust GDP growth across Africa
• Emerging middle class, consumerisation
• Steady population growth, younger profile
• Rapid urbanisation
• Serious housing deficits
– e.g. Nigeria: 18m shortage, at estimated $375bn building cost
• Massive drive for infrastructure investment
• Strengthening financial services
• Increasing inward investment
• Rapid technological adoption
• Unlocking natural resources
• Increased manufacturing for export
Limestone map of Africa
(By courtesy of Ian Osburn, Cantor Fitzgerald)
15
Significant demand upside
Cement consumption and GDP
History shows that demand for
cement rises rapidly when GDP
takes off from a low base as
nations build out their
transport,
business
and
housing infrastructures.
China
1,000
Egypt
Algeria
Morocco
Senegal
Per capita
cement
consumption 100
Brazil
Gabon
Serbia
India
Most countries in sub-Saharan
Africa are in the early stages of
this growth curve, which
typically breaks through the
average in the build-up phase,
peaking at around 600kg700kg, before settling back
towards an average of 400kg in
40 years.
South Africa
Benin
Colombia
Ghana
Liberia
(kg, log scale)
Nigeria
Cameroon
Cote d'Ivoire
Zambia
Indonesia
Rep. Congo
Global per-capita
average
Ethiopia
513kg
Malawi
Nigeria consumes
per capita
10
0
2,000
4,000
6,000
GDP per capita
(current US$, before rebase)
8,000
10,000
12,000
126kg
16
Nigeria’s market strengths
• Strong, sustained GDP growth of around 7%
• Africa’s largest population 170m, rising at 2.6%
• Rapid urbanisation and housing need
• Good commitment to infrastructure spending
• 5-year tax breaks for new factories
• Import protection
• Adequate limestone and other resources
• Attractive cement pricing - $175/tonne
• Standardised around 42.5 grade for building
• Availability of low-cost natural gas near cities
• Above-average 10.9% CAGR since 2004
• High upside on 126kg per-capita consumption
• Export incentives available
• Ideal location for duty-free exports into ECOWAS
Operator
Plant
Capacity
Dangote
Ibese
Dangote
Obajana
Dangote
Gboko
6.0
4.0
Lafarge
Wapco
Ewekoro,
Shagamu
4.2
Ashakacem
Gombe
0.9
Unicem
Calabar
2.5
Sokoto
Sokoto
0.6
10.25
17
Nigerian market growth
• Market growing at average 10.9% from 2004-2013
Growth in Nigerian cement sales, 2004-2013 (million tonnes)
Manufactured
Imported
25
• But H1 2014 constrained by gas / LPFO shortages
leading to supply problems
• Strong demand evidenced in good forward order book
• Nigeria’s monthly cement shipments have grown at an
average of 10.6% since January 2011, when compared
with the previous year (2011-2013)
• The market grew in 32/36 months from 2011-2013
• In the same period, Dangote Cement’s monthly growth
has been 20.9% as new capacity enabled gains in
market share
• Dangote Cement has exceeded the market’s growth
in 32/36 months from January 2011 – December 2013
• Only 2/36 months saw reductions compared with
the prior year
20
15
10
5
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Dangote Cement estimates
Seasonal trends in Nigerian cement sales, 2010-2014 (000 tonnes)
FY 2014
FY 2013
FY 2012
FY 2011
FY 2010
2,100
1,900
1,700
1,500
1,300
1,100
Jan Feb Mar Apr May Jun
Jul
Aug Sep Oct Nov Dec
Source: Dangote Cement estimates
18
Strong market position
•
•
•
Per-capita consumption of cement is very low
in Nigeria, at about 126kg/person
Total production capacity for all Nigerian
cement producers could be about 48-50 million
tonnes by the end of 2018, based on currently
visible projects for which we believe funding
has definitely been committed. Actual
production will depend on completion of
building and speed of ramp-up in 2014-18
Some producers are already reaching peak
production, meaning they cannot grow without
investment
Estimated Nigerian production capacity and demand evolution (MTPA)
Capacity
Dangote
Consumption growth
8%
10%
12%
Others
14%
60
Export potential
50
40
30
•
Even assuming just 10% CAGR in demand for
cement and 100% utilisation rates, Nigerian
demand for cement could outstrip this planned
new capacity by 2022/3
•
At faster demand growth or lower utilisation
rates, Nigeria will need new capacity even
earlier, perhaps as early as 2018
•
Nigeria needs to build a new 2.5MTPA plant
every year at current rates of growth
70% share of capacity
if no other plants built
20
10
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Dangote Cement estimates, market information
19
Strategy: West & Central Africa
• Economic Community of West African States
– 15 countries, >310m people, (800m by 2050)
– Ave. 7% GDP growth forecast in target countries
– Strong demand driven by infrastructure, housing
– Many states lack limestone, obliged to import
– Attractive cement pricing across the region
– Average 114kg per capita cement consumption
• Attractive trading within ECOWAS FTZ, CEMAC
– Duty free trading between members
– High tariffs on imports from non-member states
– Cash incentives available when exporting from Nigeria
• Able to reach 19 countries – 1/3rd of Africa
• Supply the region with clinker / bulk exports from Nigeria, Senegal
– Clinker benefits from easier transport and lower tax, and adds manufacturing value in
target country
• Region’s leading producer
– 41MTPA integrated production capacity by H2 2016, across Nigeria, Senegal, Congo
– 5MTPA grinding capacity by H2 2015: Cote d’Ivoire, Ghana, Cameroon, Liberia
Key
Integrated plant
Grinding plant
Import terminal
– 1.5MTPA terminal capacity by Q4 2014
– Building export terminals in Nigeria
20
West & Central Africa
Country
Cement
Type
Capacity
Capex
Capex
Operational Strategy
/tonne
Cameroon
1.5 MTPA
Grinding
$140m
$93
Q4 2014
Supply with clinker from Nigeria, serve local market and
export to Chad, CAR, Gabon
Rep. Congo
1.5 MTPA
Integrated
$301m
$201
H2 2016
Serve domestic and export markets, including Cabinda in
Angola and Kinshasa region of DRC (Katanga,
Lumumbashi to be supplied from Zambia)
Cote
d’Ivoire
1.5 MTPA
Grinding
$100m
$67
H2 2015
Supply clinker from Senegal, Nigeria and reach previously
underserved interior regions
Ghana
1.0 MTPA
1.5 MTPA
Terminal
Grinding
$100m
$67
Operating
H2 2015
Large deficit market; augment existing Tema import
terminal with new grinding facilities at Tema and
Takoradi
Liberia
0.5MTPA
Grinding
$75m
$150
H2 2015
Supply from Senegal plant to serve mostly domestic
consumption
Senegal
1.5 MTPA
Integrated
$307m
$205
Q4 2014
Use as production base to feed coastal importers
e.g. Liberia, Sierra Leone
Sierra
Leone
0.7 MTPA
Terminal
$45m
$90
Q4 2014
Supply bulk cement from Senegal plant to serve mostly
domestic consumption
Benin, Togo, Chad, Burkina Faso, Niger
Small but growing markets that will be supplied bulk and
bagged cement from operations in Nigeria and
elsewhere, through relationships with local distributors
21
Strategy: Eastern & Southern Africa
• Operations in five countries
– Eastern/Southern Africa population of 400m (868m by 2050)
– Low urbanisation, 32% average
– Low average per-capita cement consumption of 102kg
NB. Plans on hold
in South Sudan
• Access to more than nine additional countries
• Good growth potential across the region
• Adequate availability of other additives, hence able
to manage cost of production
• Enter markets with new, highly efficient plants able
to compete with older facilities on lower production
and maintenance costs, lower power consumption,
higher cement output
• Most Dangote Cement plants to be sited inland,
where pricing is higher, away from imports
• Within COMESA trading region
• Region’s leading producer – 14.2 MTPA integrated
production capacity by H1 2017.
Key
Integrated plant
22
Eastern & Southern Africa
Country
Ethiopia
Cement
Type
Capacity
2.5 MTPA
Integrated
Capex
$469m
Capex
Operational
/tonne
$188
Strategy
Q4 2014
Compete in mostly local market enjoying good
economic growth and high investment in
infrastructure
Kenya
1.5 MTPA
(TBC)
Integrated
$300
$200
H1 2017
Initially conceived as a Grinding plant but have been
revised into an Integrated plant due to favourable
market conditions and the discovery of good quality
limestone. Compete in mostly local market enjoying
good economic growth and high investment in
infrastructure, energy
South
Africa
Combined
4.2 MTPA
Integrated
Grinding
$326m
$100
Operating
Enter local market that has aging plants, compete with
new, more efficient technologies that reduce costs. JV
with Sephaku Holdings, which owns 36%
Tanzania
3.0 MTPA
Integrated
$453m
$151
H2 2015
Attractive pricing and high upside on low per capita
use; export potential to landlocked countries
Zambia
1.5 MTPA
Integrated
$300m
$200
Q4 2014
Size of plant enables good share of market on entry,
serving local and export markets
23
Improving Governance
• Appointment of new Independent Directors
– Fidelis Madavo, Public Investment Corporation of South Africa
– Emmanuel Ikazoboh (Former Sole Administrator of the Nigerian Stock Exchange)
– Ernest Ebi (Former Deputy Governor of the Central Bank of Nigeria)
• Active Investor Relations programme
– 200+ investor meetings ytd
– DCP ranked 8/78 in Extel Survey of Pan-European Construction & Building Materials Sector
– Dangote Industries Investor Day on 25th September
• Risk Management a priority
– In-house Risk Management team headed by Group Chief Risk Officer
– Working with UK-based consultants to identify key risks and develop mitigation plans
– Risk review already carried out – classify, quantify and prioritise risks
– Creation of Risk Management Framework to align DCP with international best practices
– Developing Scenario Analysis tools to assist Risk Management
24
Sustainability
Dangote Group is strengthening its sustainability management systems to ensure
group-wide observance of International Finance Corporation Performance Standards
•
•
Appointed Environmental Resources Management to guide the process
Road map includes:
–
–
–
Establishment of a Sustainability (Environment, Health & Safety and Social) Directorate
Revision and standardization of sustainability policies and procedures across the group
Capacity building and training to strengthen sustainability practice
25
Appendix
The following details on African projects contain estimates gathered from several sources
including Dangote Cement, KPMG, Global Cement Report and the IMF.
Capacity and consumption charts are based upon GCR and Dangote Cement estimates of how
capacity will develop in each country, based on projects currently visible and where a
commitment to build has been made. Estimates of consumption are based upon GCR estimates
to 2014, beyond which growth has been extrapolated at 8%, 10%, 12% and 14%.
Project start times are estimates based upon current progress and expectations.
26
Cameroon – Q4 2014
Estimated capacity and demand evolution
Economic & Demographic
Population
20.9m
Growth rate
2.2%
Urbanisation
49%
GNI / capita
$2,270
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
5
2013E
2014E
2015E
2016E
2017E
4
5.4%
5.5%
5.8%
5.8%
5.8%
3
Cement market
2
Consumption
1.5 MTPA
Production
0.94 MTPA
1
Import/Export
0.4 MTPA / 0.05
MTPA
Capacity / Plants
1.6MTPA / 2 Gr
0
Price per tonne
$190
Per capita cons.
66kg
Key incumbents
Cimenteries du Cameroun
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
No limestone, deficit market
•
Good reserves of Pozollana additive
•
Upside from low per-capita use
•
Significant 10-year tax incentives
•
Supply with clinker from Nigeria
•
Export potential to Chad, CAR, Gabon
Project Details
Capacity
Type
Primary fuel
Location
1.5MTPA
Grinding
N/A
Douala
Operational
H2 2014
Capex cost
$105m
Target EBITDA %
53% - 61%
Target markets
Mostly domestic
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
27
Republic of Congo – H2 2016
Estimated capacity and demand evolution
Economic & Demographic
Population
4.2m
Growth rate
2.4%
Urbanisation
63%
GNI / capita
$3,190
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
3
2013E
2014E
2015E
2016E
2017E
5.9%
6.4%
20.4%
2.5%
8.7%
Cement market
2
1
Consumption
0.9 MTPA
Production
0.1 MTPA
Import/Export
0.7 MTPA / 0.0
MTPA
Capacity / Plants
0.2MTPA / 1
Price per tonne
$200
Per capita cons.
159kg
Key incumbents
Societe Nouvelle des Ciments
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Ideally located for export to Kinshasa, in DRC, and to Cabinda in Angola
•
Duty free movement in CEMAC zone
•
Attractive cement pricing
•
7-year tax incentives
•
Sub-scale competitors
Project Details
Capacity
Type
Primary fuel
Location
1.5MTPA
Integrated
Coal
Madingou
Operational
April 2016
Capex cost
$301m
Target EBITDA %
50% - 58%
Target markets
Domestic/Export
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
28
Cote d’Ivoire – H2 2015
Estimated capacity and demand evolution
Economic & Demographic
Population
20.6m
Growth rate
2.1%
Urbanisation
50%
GNI / capita
$1,810
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
4
2013E
2014E
2015E
2016E
2017E
7.9%
7.9%
8.1%
7.3%
7.9%
3
2
Cement market
Consumption
1.9 MTPA
Production
1.9 MTPA
Import/Export
1.3 MTPA / 0.07
MTPA
Capacity / Plants
2.5MTPA / 4 Gr
Price per tonne
$180
Per capita cons.
64kg
Key incumbents
Amida, Holcim, Ciments d’Afrique
1
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Good potential in interior regions
•
5-year tax incentives
•
No limestone, reliant on imports
•
Strong potential for economic growth
•
Attractive cement pricing
•
Supply cement from Senegal, Nigeria
Project Details
Capacity
Type
Primary fuel
Location
1.5MTPA
Grinding
N/A
Abidjan
Operational
June 2016
Capex cost
$100m
Target EBITDA %
47% - 55%
Target markets
Mostly domestic
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
29
Ghana – H2 2015
Estimated capacity and demand evolution
Economic & Demographic
Population
25.5m
Growth rate
2.2%
Urbanisation
44%
GNI / capita
$1,620
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
12
2013E
2014E
2015E
2016E
2017E
10
7.3%
6.5%
6.7%
5.7%
5.7%
8
6
Cement market
4
Consumption
5.2 MTPA
Production (Gr)
4.6 MTPA
Import/Export
3.8 MTPA / 0.0
MTPA
Capacity / Plants
6.7MTPA /
4Gr+1Im
Price per tonne
$153
Per capita cons.
186kg
Key incumbents
Ghacem, WACEM, Dangote GreenView
2
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
No limestone, reliant on imports
•
Increasing infrastructure investment
•
High and increasing demand gap
•
Supply from Ibese, 300km away
•
Strong economic growth from oil / gas
•
100% duty exemption on machinery
Project Details
Capacity
Type
Primary fuel
Location
1.0 MTPA, 1.5
MTPA
Import, Grinding
N/A
Tema, Takoradi
Operational
2015/6 TBC
Capex cost
TBC
Target EBITDA %
38% - 46%
Target markets
Mostly domestic
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
30
Liberia – H2 2015
Estimated capacity and demand evolution
Economic & Demographic
Population
4.2m
Growth rate
3.3%
Urbanisation
47%
GNI / capita
$340
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
1.5
2013E
2014E
2015E
2016E
2017E
7.2%
4.5%
7.5%
6.0%
5.7%
Cement market
1.0
0.5
Consumption
0.4 MTPA
Production
0.35 MTPA
Import/Export
0.05 MTPA / 0.0
MTPA
Capacity / Plants
0.5MTPA / 2 (Gr)
Price per tonne
$180
Per capita cons.
83kg
Key incumbents
Cemenco
0.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Increasing stability and growth
•
Rapid increase in cement sales
•
Debt forgiveness spurs investment
•
No import tariffs on cement
•
Slight deficit market
•
No limestone, supply from Senegal
Project Details
Capacity
Type
Primary fuel
Location
0.5MTPA
Import
N/A
Monrovia
Operational
TBC
Capex cost
$44m
Target EBITDA %
39% - 47%
Target markets
Mostly domestic
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
31
Senegal – Q4 2014
Estimated capacity and demand evolution
Economic & Demographic
Population
13.1m
Growth rate
2.5%
Urbanisation
42%
GNI / capita
$1,910
GDP
Growth
Capacity
8%
10%
12%
14%
10
2013E
2014E
2015E
2016E
2017E
8
4.2%
4.5%
4.7%
4.8%
5.0%
6
Cement market
4
Consumption
2.7 MTPA
Production
4.8 MTPA
2
Import/Export
0.0 MTPA / 2.1
MTPA
Capacity / Plants
6.5MTPA / 2
0
Price per tonne
$122
Per capita cons.
198kg
Key incumbents
Sococim, Ciments du Sahel
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Good limestone resources
•
Ease of export along West African coast
•
Steady growth in domestic demand
•
Duty-free trading In ECOWAS FTZ
•
Bordered by states lacking limestone
•
7-year tax breaks
Project Details
Capacity
Type
Primary fuel
Location
1.5MTPA
Integrated
Coal
Pout
Operational
H2 2014
Capex cost
$307m
Target EBITDA %
32% - 40%
Target markets
Mostly export
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
32
Sierra Leone – Q4 2014
Estimated capacity and demand evolution
Economic & Demographic
Population
6.1m
Growth rate
2.2%
Urbanisation
40%
GNI / capita
$830
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
1.5
2013E
2014E
2015E
2016E
2017E
17.1%
14.2%
12.2%
4.2%
4.3%
Cement market
1.0
0.5
Consumption
0.4 MTPA
Production
0.3 MTPA
Import/Export
0.3 MTPA / 0.0
MTPA
Capacity / Plants
0.5MTPA / 1 (Gr)
Price per tonne
$180
Per capita cons.
56kg
Key incumbents
Sierra Leone Cement Corp.
0.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Strong economic growth from low base as country benefits from mining boom
•
High foreign investment in infrastructure, particularly to support mining
•
No native limestone
•
Supply bulk cement from Senegal
Project Details
Capacity
Type
Primary fuel
Location
0.7MTPA
Import & bagging
N/A
Freetown
Operational
Q4 2014
Capex cost
$40m
Target EBITDA %
36% - 44%
Target markets
Mostly domestic
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
33
Ethiopia – Q4 2014
Estimated capacity and demand evolution
Economic & Demographic
Population
87m
Growth rate
2.1%
Urbanisation
17%
GNI / capita
$1,040
GDP
Growth
Capacity
8%
10%
12%
14%
20
2013E
2014E
2015E
2016E
2017E
6.5%
6.5%
6.5%
6.5%
6.5%
15
10
Cement market
Consumption
6.45 MTPA
Production
7.3 MTPA
Import/Export
0.2 MTPA / 1.0
MTPA
Capacity / Plants
12.6MTPA / 20
Price per tonne
$131
Per capita cons.
61kg
Key incumbents
Derba, Mugher, Messebo, NSCS, Ture Diredawa, Ethio Cement
5
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Large population, strong growth
•
Upside from low per-capita use
•
2-year tax incentives
•
High infrastructure investment
•
Export potential
•
Availability of Pozollana
Project Details
Capacity
Type
Primary fuel
Location
2.5MTPA
Integrated
Coal
Mugher
Operational
December 2014
Capex cost
$470m
Target EBITDA %
32% - 40%
Target markets
Mostly domestic
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
34
Kenya – H1 2017
Estimated capacity and demand evolution
Economic & Demographic
Population
43m
Growth rate
2.7%
Urbanisation
32%
GNI / capita
$1,640
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
15
2013E
2014E
2015E
2016E
2017E
6.1%
6.3%
6.0%
6.9%
5.5%
Cement market
10
5
Consumption
3.7 MTPA
Production
4.85 MTPA
Import/Export
0.7 MTPA / 0.65
MTPA
Capacity / Plants
7.4MTPA / 9
Price per tonne
$160
Per capita cons.
80kg
Key incumbents
Bamburi, Savannah, East African PC, ARM, Mombasa, National
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Solid economic growth, oil discovery
•
Potentially large infrastructure spend
•
Encouraging PPP investment
•
Major energy projects, inc. nuclear
•
Large housing deficit
•
Upside from low per-capita use
Project Details
Capacity
Type
Primary fuel
Location
1.5 MTPA
Integrated
Coal
Near Nairobi
Operational
H1 2017
Capex cost
$300m
Target EBITDA %
TBC
Target markets
Domestic, export
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
35
South Africa – Operational
Estimated capacity and demand evolution
Economic & Demographic
Population
51.1m
Growth rate
1.2%
Urbanisation
62%
GNI / capita
$10,360
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
25
2013E
2014E
2015E
2016E
2017E
20
2.4%
3.5%
3.8%
2.9%
3.2%
15
Cement market
10
Consumption
11.6 MTPA
Production
11.8 MTPA
5
Import/Export
0.8 MTPA / 1.0
MTPA
Capacity / Plants
18.4MTPA / 15
0
Price per tonne
$122
Per capita cons.
222kg
Key incumbents
PPC, Afrisam, Lafarge, Intercement
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Aging incumbent plants not as efficient as modern plants, esp. as energy costs rise
•
Enter market with more efficient tech.
•
Availability of fly ash on long contract
•
Proximity to Jo’burg, key NE markets
•
Resurgent infrastructure spending
Project Details
Capacity
Type
Primary fuel
Location
3.3MTPA
combined
Integrated, grinding
Coal
Aganang/ Delmas
Operational
Operational
Capex cost
$326m
Target EBITDA %
39% - 45%
Target markets
Domestic, export
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
36
Tanzania – H2 2015
Estimated capacity and demand evolution
Economic & Demographic
Population
47.7m
Growth rate
3.0%
Urbanisation
26%
GNI / capita
$1,440
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
10
2013E
2014E
2015E
2016E
2017E
6.9%
7.2%
7.0%
6.9%
6.8%
Cement market
8
6
4
Consumption
2.65 MTPA
Production
2.78 MTPA
Import/Export
0.22 MTPA / 0.35
MTPA
Capacity / Plants
3.7MTPA / 4
Price per tonne
$188
Per capita cons.
46kg
Key incumbents
Tanzanian Portland Cement, Tanga Cement, Mbeya Cement
2
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Availability of low-cost gas fuel
•
High pricing
•
Upside from low per-capita use
•
Strong economic growth
•
Proximity to nine other countries, some landlocked, duty-free exports in COMESA
Project Details
Capacity
Type
Primary fuel
Location
3.0MTPA
Integrated
TBC
Mtwara
Operational
November 2015
Capex cost
$452m
Target EBITDA %
62% - 70%
Target markets
Domestic, export
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
37
Zambia – Q4 2014
Estimated capacity and demand evolution
Economic & Demographic
Population
13.7m
Growth rate
4.2%
Urbanisation
39%
GNI / capita
$1,380
GDP
Growth
Capacity (mta)
8%
10%
12%
14%
4
2013E
2014E
2015E
2016E
2017E
7.8%
8.0%
7.7%
7.9%
7.5%
3
2
Cement market
Consumption
0.95 MTPA
Production
1.4 MTPA
Import/Export
0.0 MTPA / 0.5
MTPA
Capacity / Plants
1.7MTPA / 4
Price per tonne
$200
Per capita cons.
64kg
Key incumbents
Lafarge Cement Zambia, Zambezi Portland Cement, Scirocco
1
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Global Cement Report estimates, Dangote Cement estimates
Market attractions
•
Attractive cement pricing
•
•
Ideal location for exports into mining regions of DRC, as well as Angola + others
•
Upside from low per-capita cement use
Strong economic growth
Project Details
Capacity
Type
Primary fuel
Location
1.5MTPA
Integrated
Coal
Ndola
Operational
Q4 2014
Capex cost
$300m
Target EBITDA %
57% - 65%
Target markets
Export, domestic
Source: Global Cement Report estimates, Dangote Cement estimates, IMF estimates
38
Investor relations
For further information contact:
Carl Franklin
Chief Investor Relations Officer
Dangote Industries
Uvie Ibru
Investor Relations
London
Ayeesha Aliyu
Investor Relations
Lagos
+44 207 399 3070
+44-7713 634 834
[email protected]
+44 207 399 3070
+44 7747 027 895
[email protected]
+234 1 448 0815
[email protected]
www.dangcem.com
@DangoteCement
39