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Dangote Cement Plc (DANGCEM), Africa’s biggest producer of the building material, posted a 23 percent increase in nine-month profit as cement sales rose.
Net income in the nine months to Sept. 30 rose to 92.8 billion naira ($589 million), or 7.97 naira per share, from 75.3 billion naira, or 5 naira a share, a year earlier, the Lagos- based company said in an e-mailed statement today. Revenue climbed 19 percent to 173.8 billion naira as cement sales advanced 9.2 percent to 6.4 million metric tons, it said.
“The result was driven by growth in volume, which rose more than we had expected at Obajana plant, and a 3 percent increase in cement prices,” Tomi Ajayi, an analyst with Stanbic IBTC Bank Plc (IBTCCB) in Lagos, said in an interview. Stanbic had forecast a 9 percent rise in net income, she said.
Dangote, which is also Nigeria’s biggest company by market value, is spending more than $2.5 billion on eight new plants across Africa as well as constructing cement import terminals in five countries. By the end of this year it expects to have production capacity of 19 million tons in Nigeria, rising to 29 million tons in 2015. A further 19 million tons of capacity is planned in plants across the continent by 2015.
“Dangote Cement is highly optimistic about the future given the increasingly strong economic performance of Nigeria and the African countries into which it is expanding,” the company said.
Nigerian Growth
Nigeria’s economy expanded at an annual rate of 7.7 percent in the second quarter, the company said. Dangote Cement’s full year revenue is expected to be 238 billion naira and operating profit of 124 billion naira.
The Ibese plant in Ogun, in southwest Nigeria will have capacity of 6 million tons by the end of the year and will be twice that size in 2015.
At Obajana in central Nigeria, where the plant is being expanded to double output to 10 million tons, the facilities are “being readied for production,” Dangote said. Expansion at the Gboko plant in central Benue state is expected to begin in the second half of 2012 and planned upgrades will deliver additional 1 million tons.
In Senegal, construction of the plant is scheduled to be completed in the first quarter of 2012, while production will begin in the second quarter, Dangote Cement said.
London Listing
The company “may list on the London Stock Exchange sometime next year,” Executive Officer Devakumar Edwin said on a conference call from Lagos. The company is not in a “hurry” to do so, as it wants to consolidate its expansion into African countries, he said.
The company’s stock fell 5.01 naira, or 4.6 percent, by the close in Lagos, giving it a market value of 1.6 trillion naira. Dangote Cement has declined 14 percent this year compared with an 18 percent decline in Nigeria’s benchmark index.
The fall in price may have been because some investors were disappointed that Dangote failed to pay a dividend for the nine months, as it did last year, Ajayi said. “This could be a reason for the sell-off, but it is unclear that this will be sustained.”
To contact the reporter on this story: Vincent Nwanma in Lagos at vnwanma@bloomberg.net
To contact the editor responsible for this story: Antony Sguazzin in Johannesburg atasguazzin@bloomberg.net.
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