Dangote Cement Plc · NSENG:DANGCEM
Dangote Cement — H1 2017 Earnings Presentation
37 slides from Dangote Cement's earnings presentation, July 2017
Slide 1: Unaudited results for the six months to 30th June 2017
Unaudited results for the six months to 30th June 2017
Slide 2: At a glance
At a glance • Largest cement producer in Africa, 45.8Mta capacity as of 30th June 2017 – Operations in 10 countries across Africa – Capacity leader in 6/10 of those markets • Substantial competitive advantages including: – Financial strength – Modern technology – Superior logistics • Delivering stro
Slide 3: Investment highlights
Investment highlights Exposure to Strong Nigerian growth growth Generous Exposure to Market High African dividend Infrastructure leadership Dividend policy spending Investment Reasons to attractions invest Play on Higher Industry Africa’s return Low debt disruptor consumer alternative growth to mini
Slide 4: Our capacity
SR DANGOTE Our capacity CEMENT
Slide 5: Strong financial performance
Strong financial performance 700 600 +47% +46% 500 400 ₦B 300 200 100 0 2012 2013 2014 2015 2016 Revenue EBITDA Cash flow from operations Capex Dividend paid 5
Slide 6: Strong volume growth
Strong volume growth 25 20 20.4% CAGR 15 Million tonnes 10 5 0 2010 2011 2012 2013 2014 2015 2016 Nigeria Cameroon Ethiopia Ghana Senegal South Africa Tanzania Zambia 6
Slide 7: Why Sub-Saharan Africa? Why cement?
Why Sub-Saharan Africa? Why cement? Cement is an essential building material with no Sub-Saharan Africa viable substitutes; significantly lags global Africa needs billions of average per-capita cement tonnes in the coming consumption Key markets are decades Nigeria, Ethiopia, South Africa; Africa is
Slide 8: Overview of African cement market
Overview of African cement market Positive long-term mega-trends Rapid increase in urbanisation presents strong opportunity • Increasing political stability enabling rapid economic growth 2,500 • Steady population growth, younger profile increases need for building Rural Urban Millions 163m more urb
Slide 9: SSA demand growing strongly
SSA demand growing strongly Global Cement Consumption 2010-2018F (Million tonnes) SSA CAGR 4,500 7.2% 140 4,000 120 3,500 100 Global consumption Sub-Saharan Africa 3,000 Million tonnes Million tonnes 2,500 80 2,000 60 1,500 40 1,000 20 500 0 0 2010 2011 2012 2013 2014 2015 2016E 2017F 2018F Australa
Slide 10: Operations in growth markets
Operations in growth markets GDP growth 2012 2013 2014 2015 2016E 2017F 2018F Cameroon 4.6% 5.6% 5.9% 5.8% 4.4% 3.7% 4.3% Congo 3.8% 3.3% 6.8% 2.6% -2.7% 0.6% 8.8% Ethiopia 8.7% 9.9% 10.3% 10.4% 8.0% 7.5% 7.5% Ghana 9.3% 7.3% 4.0% 3.9% 4.0% 5.8% 9.2% Nigeria 4.3% 5.4% 6.3% 2.7% -1.5% 0.8% 1.9% +47%
Slide 11: Capacity leader in 6/10 countries
Capacity leader in 6/10 countries Nigeria Cameroon Congo Ethiopia Ghana Producer Capacity Producer Capacity Producer Capacity Producer Capacity Producer Capacity Dangote Cement 29.3 Cimencam 1.7 Dangote Cement 1.5 Dangote Cement 2.5 Ghacem 4.5 Lafarge Africa 10.4 Dangote Cement 1.5 Others 1.7 Derba
Slide 12: Strategic raw material access
Strategic raw material access • Limestone is the key and irreplaceable ingredient of all types of modern cement • Commercially viable deposits of limestone are relatively scarce across many parts of Africa – Ideally need high-quality limestone to be near demand centres, fuel and distribution network
Slide 13: Strategic initiatives and goals
Strategic initiatives and goals To be Africa’s leading producer of cement, respected for the quality of Vision its products and services and for the way it conducts its business Goal To deliver superior and sustainable risk-adjusted ROI, IRR on our investments • Key elements of business model – Targ
Slide 14: Competitive advantages
Competitive advantages BUYING POWER FUEL SELF-SUFFICIENCY • Cuts procurement costs, increases returns • Reduces costs and disruptions FAVOURABLE MARKETS FOCUS ON QUALITY • Incentives, fragmented industry • Superior products for market needs LARGER PLANTS SUPERIOR LOGISTICS • Economies in procurement
Slide 15: Board and Committees
Board and Committees Board of Directors Aliko Dangote (1) Onne van der Weijde Brian Egan Olakunle Alake Sani Dangote Abdu Dantata Ernest Ebi* Devakumar Edwin Emmanual Ikazoboh* Fidelis Madavo Joseph Makoju Olusegun Olusanya * Dorothy Ufot * Douraid Zaghouani Finance & General Audit, Compliance & Rem
Slide 16: Strong corporate governance
Strong corporate governance International standards of governance Improving corporate disclosure • Achieved Premium Listing status on the Nigerian Stock Exchange, August 2015 Annual Report Pages • Followed rigorous audit of governance policies 250 232 214 • June 2016 appointment of first female dire
Slide 17: H1 2017 highlights
H1 2017 highlights • Strong financial performance despite volume fall 6m to 30th June 2017 2016 Change Sales volumes ‘000t ‘000t • Revenues up 34.5% Nigeria 6,854 8,766 (21.8%) Pan-Africa 4,747 4,218 12.6% • Group EBITDA up 53.7% Inter-company sales (92) (14) – EBITDA margins improve to 49.4% Total
Slide 18: Year to date
Year to date Q1 2017 Q2 2017 H1 2017 H1 2016 % change Sales volumes ‘000t ‘000t ‘000t ‘000t Nigeria 3,770 3,085 6,855 8,766 (21.8%) Pan-Africa 2,342 2,405 4,747 4,218 12.6% Inter-company sales (87) (6) (93) (14) Total 6,025 5,484 11,509 12,970 (11.3%) Revenues ₦m ₦m ₦m ₦m Nigeria 152,355 139,040 291
Slide 19: Group financial overview
Group financial overview Income Statement Six months to 30th June 2017 2016 ₦m ₦m % change Revenue 412,676 292,191 41.2% Cost of sales (177,552) (139,187) 27.6% Gross profit 235,124 153,004 53.7% Gross margin 57.0% 52.4% EBITDA 203,672 132,514 53.7% EBITDA margin 49.4% 45.4% EBIT 163,495 98,042 66.8
Slide 20: Group financial overview (cont'd)
Group financial overview (cont’d) Movement in net debt Cash Debt Net debt ₦B ₦B ₦B As at 1st January 2017 115,693 (356,465) (240,772) Cash generated from operations before 197,460 - 197,460 changes in working capital Changes in working capital (49,934) - (49,934) Income tax paid (2,830) - (2,830) Ad
Slide 21: Financial overview (cont'd)
Financial overview (cont’d) Balance sheet As at As at 30/6/17 31/12/16 ₦m ₦m Property, plant and equipment 1,191,628 1,155,711 Other non-current assets 79,625 64,888 Intangible assets 5,318 4,145 Current assets 250,855 187,471 Cash and cash equivalents 110,573 115,693 Total Assets 1,637,979 1,527,90
Slide 22: Analysis of debt
Analysis of debt ₦B Short-term* Long-term Total % Naira 187.0 29.4 216.4 51% US$ 76.3 22.1 98.4 23% Rand 5.1 42.5 47.6 11% Other 14.4 47.6 62.0 15% Total 282.8 141.6 424.4 100% *Including overdraft • Most short-term debt is to parent • Low US$ debt exposure, mainly in relation to LCs • DCP Nigeria l
Slide 23: Credit ratings published
Credit ratings published Moody’s (5th July 2017) Ba3 Local Currency Corporate Family Rating, Aaa.ng National Scale Rating "Dangote Cement Plc’s Ba3 local currency corporate family rating, one notch above the Government of Nigeria’s own rating, reflects the company’s strong standalone credit profile
Slide 24: Strong Nigeria performance
Strong Nigeria performance • Revenues up 34.5% despite fall in volumes Nigeria performance – Estimated 64.5% share Six months to 2017 2016 Change 30th June – Exports of 0.1Mt Volumes* (kt) 6,854 8,766 (21.8%) • EBITDA margins up at operations Revenue* (₦m) 291,395 216,617 34.5% – Helped by better fu
Slide 25: Strong uplift in Nigeria Q2 EBITDA
Strong uplift in Nigeria Q2 EBITDA ₦ 50,000 5,000 ₦ 45,000 ₦ 40,000 ₦ 45,084 4,500 ₦ 35,000 ₦ 40,412 ₦ 30,000 ₦ 37,817 65.7% 4,000 64.8% ₦ 25,000 65.7% ₦ 28,192 ₦ 29,640 ₦ 20,000 ₦ 23,743 3,500 ₦ 25,738 ₦ 15,000 ₦ 19,780 61.8% 53.3% ₦ 26,175 61.0% 44.0% ₦ 10,000 ₦ 14,674 ₦ 13,729 3,000 ₦ 24,859 ₦ 12
Slide 26: Better Nigeria fuel reduces costs
Better Nigeria fuel reduces costs Relative cost of alternative fuels vs gas per Fuel mix tonne of clinker Six months to Obajana Ibese Obajana Ibese 30th June 2017 2016 2017 2016 Own-mined coal 0.84x 0.89x Gas 58% 50% 55% 30% Imported coal 1.70x 1.36x Coal 38% 14% 43% 44% Gas 1.00x 1.0x LPFO 4% 36% 2
Slide 27: Nigeria cash cost analysis
Nigeria cash cost analysis % of average cash costs per tonne (Nigeria, 6m to June 2017) Refractories, 1% Packaging 13% Gypsum, 6% Kiln fuel Mine Cost, 1% 26% Plant General, 5% Power Plant 14% SG&A 18% Contract Maintenance, Production wages & 1% Salaries, 5% Maintenance Maintenance O&M Technical, 2%
Slide 28: Pan-Africa gaining momentum
Pan-Africa gaining momentum • Strong performance despite economic downturn Rest of Africa performance across much of Africa Six months 2017 2016 Change to 30th June • Sales volumes up 12.6% to 4.7Mt Volumes sold (kt) 4,747 4,218 12.6% • Revenues up 63.7% to ₦124.4B • EBITDA up 52.0% to ₦19.6B Revenu
Slide 29: Country updates
Country updates Cameroon Ethiopia • 3.7% GDP growth forecast by IMF in 2017 • IMF forecasts 7.5% GDP growth in 2017 • Housing, infrastructure, football driving cement • Growth & Transformation Plan driving major projects demand • Total market sales of 4.2Mt in H1 2017 • 627Kt cement sold, up 16.3% •
Slide 30: Country updates (3m to 30 June)
Country updates (3m to 30 June) th Sierra Leone Tanzania • Economy recovering from Ebola, GDP growth • Strong GDP growth continuing expected 5% in 2017 (IMF) • Large infrastructure projects driving • Steady start after 0.7Mt import facility opened in Q1 cement demand • 53Kt cement sold • Gas gensets
Slide 31: Update on trading and outlook for 2017
Update on trading and outlook for 2017 • Rainy season heavy in Nigeria • Sharp increase in Nigerian EBITDA/tonne will drive substantial margin gains in 2017, +47% • Focus remains on EBITDA in US$ +46% • Volume growth expected from: • Increased exports from Nigeria to Ghana • Tanzania ramp-up in 2017
Slide 32: Sustainability
Sustainability • Dangote Cement is committed to introducing sustainability reporting in its 2018 Annual Report • Reporting will be guided by: • Nigerian Stock Exchange requirements on sustainability reporting • Cement Sustainability Initiative +47% +46% • Global Reporting Initiative G4 Sustainabilit
Slide 33: Pioneer Tax schedule
Pioneer Tax schedule Gboko 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 +47% +46% 2018 2019 Line 1 Line 2 Ibese 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Line 1 Line 2 Line 3 Line 4 Feb Obajana 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Line 1 Line 2 Line 3 Li
Slide 34: Investment in plants
Investment in plants $m Obajana 1,895 Ibese 1,440 Gboko 561 +46% +47% Nigeria $3,897m Cameroon 138 Congo 312 Ethiopia 521 Senegal 358 Sierra Leone 52 South Africa 330 Tanzania 540 Zambia 358 Pan-Africa $2,609m Total $6,506m NB. Total investment in Nigeria is $5.3B including coal mills, logistics and
Slide 35: Reference
Reference Cameroon Congo Ethiopia Ghana Nigeria Senegal Sierra Leone South Africa Tanzania Zambia +47% +46% Demographic & economic Population (m) 23.3 4.6 99.4 27.4 182.2 15.1 6.5 54.5 53.5 16.2 Forecast GDP Growth 2017 5.7% 4.3% 8.9% 7.5% 1.0% 6.8% 6.9% 1.1% 7.1% 4.0% Urbanisation % 52.0% 64.0% 17.
Slide 36: Regional cement consumption trends
Regional cement consumption trends CAGR 2010 2011 2012 2013 2014 2015 2016E 2017F 2018F +47% +46% 2010-18F Mt Mt Mt Mt Mt Mt Mt Mt Mt % Australasia 13.1 13.2 11.9 10.5 11.2 11.3 11.4 11.8 12.0 -1.1% Central America 50.3 51.7 53.4 52.9 55.0 58.1 59.1 60.6 61.3 2.5% Central Europe 43.1 46.5 42.5 41.3
Slide 37: Investor Relations contacts
Investor Relations contacts For further information contact: Carl Franklin Head of Investor Relations Dangote Cement Plc +44 207 399 3070 +44-7713 634 834 carl.franklin@dangote.com www.dangotecement.com @DangoteCement 37