Dangote Cement Plc · NSENG:DANGCEM
Dangote Cement — Investor Presentation (March 2017)
33 slides from Dangote Cement's investor presentation, March 2017
Slide 1: Group presentation March 2017
Group presentation March 2017
Slide 2: At a glance
At a glance • Largest cement producer in Africa, 45.8Mta capacity as of March 2017 – Operations in 10 countries across Africa • Delivering strong financial and operating performance – 23.6Mt cement sold through operations in eight countries in 2016, up 25% on 2015 – FY 2016 revenues of ₦615.1bn, up
Slide 3: Strong financial growth
Strong financial growth 700 600 500 400 300 20.3% CAGR ₦B 200 100 13.9% CAGR 0 2010 2011 2012 2013 2014 2015 2016 Revenues (₦B) EBITDA (₦B) 3
Slide 4: 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 4
Slide 5: Our presence
SR DANGOTE Our presence CEMENT < g = & & s = 3 B
Slide 6: 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 7: 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 • Over 1.4B Africans are forecast to live in urban areas by 2050, which is > 4x North America’s current populati
Slide 8: 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 9: 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 10: How we create value
How we create value Size and buying power Careful market selection Larger scale of plants New quarries enable enables favourable looks for countries with built with high degree of optimal mining of procurement of plants at good resources, cement standardisation and highest quality raw lower cost; br
Slide 11: Board and Committees
Board and Committees Board of Directors Aliko Dangote (1) Onne van der Weijde 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 & Remuneration &
Slide 12: 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 13: Our achievements so far
Our achievements so far Before we began manufacturing, Nigeria was one of the world’s biggest importers of cement. In 2012 we opened 11Mta new capacity that enabled it to become self-sufficient In 2016 we transformed Nigeria into a NET EXPORTER OF CEMENT +45.4% 13
Slide 14: Highlights of 2016
Highlights of 2016 Financial results Regional revenues (₦B) • Revenue up 25.1% to ₦615.1B Year to 2016 2015 Change 31st December • Strong increase in Q4 EBITDA after price increase Nigeria 426.1 389.2 9.5% • EPS up 4.5% to ₦11.34 • Dividend up 6.25% to ₦8.5 per share, 74.9% payout ratio Pan Africa 1
Slide 15: Financial overview
Financial overview Income Statement Year ended 31st December 2016 2015 ₦B ₦B % change Comments Revenue 615.1 491.7 25.1% Driven by strong volume growth Cost of sales (323.8) (201.8) 60.5% Gross profit 291.3 289.9 0.5% Gross margin 47.4% 59.0% EBITDA 257.2 262.4 (2.0%) Lower average pricing, unfavour
Slide 16: Financial overview (cont’d): Movement in net debt
Financial overview (cont’d) Movement in net debt Cash Debt Net debt ₦B ₦B ₦B As at 1st January 2016 40.8 (245.0) (204.2) Cash generated from operations before 243.9 243.9 changes in working capital Changes in working capital 35.9 35.9 Income tax paid (1.1) (1.1) Additions to fixed assets* (136.2) (1
Slide 17: Financial overview (cont’d): Balance sheet
Financial overview (cont’d) Balance sheet As at As at 31/12/16 31/12/15 ₦B ₦B Property, plant and equipment 1,155.7 917.2 Other non-current assets 64.9 25.1 Intangible assets 4.1 2.6 Current assets 187.5 125.2 Cash and cash equivalents 115.7 40.8 Total Assets 1,527.9 1,110.9 Non-current liabilities
Slide 18: Analysis of debt
Analysis of debt ₦bn Short-term* Long-term Total % Naira 146.6 78.3 224.8 63.1% US$ 57.4 - 57.4 16.1% Rand - 50.2 50.2 14.1% Other - 24.0 24.0 6.7% Total 204.0 152.4 356.4 100% 57.2% 42.8% 100% *Including overdraft • Most short-term debt is to parent; plan to refinance with Naira bond • Low US$ debt
Slide 19: Nigerian market remains robust
Nigerian market remains robust Manufactured Imported 25 20 9.6% CAGR Million tonnes 15 10 5 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 19
Slide 20: Strong Nigeria performance
Strong Nigeria performance • Record FY sales up 13.8% to 15.1Mt including exports Nigeria performance – 14.8Mt sold within Nigeria, despite recession Year to 2016 2015 Change 31st December • Sharp increase in Q4 EBITDA/tonne after price increase Volumes* (kt) 15,128 13,290 13.8% – Most of uplift was
Slide 21: Nigeria sales by market
Nigeria sales by market Exports Corporate 2% 2% North Central South West 13% 15% North East 7% South South North West 17% 9% South East Lagos & Ogun 13% 22% 21
Slide 22: Price evolution
Price evolution Ex-factory price before discounts (excl. VAT) ₦ 2,462 ₦ 2,500 $200 $189 ₦ 2,224 ₦ 2,081 $190 ₦ 2,033 ₦ 2,000 $177 $180 $176 ₦ 1,629 ₦ 1,652 ₦ 1,567 ₦ 1,581 $167 ₦ 1,462 ₦ 1,462 $170 ₦ 1,500 ₦ 1,367 ₦ 1,271 ₦ 1,414 ₦ 1,327 $164 $166 $160 ₦ 1,150 $156 ₦ 1,000 $150 $145 $142 $142 $141 $
Slide 23: Focus on Q4 performance
Focus on Q4 performance ₦ 40,000 ₦ 37,817 5,000 ₦ 35,000 ₦ 30,000 ₦ 28,192 4,500 ₦ 25,738 ₦ 25,000 ₦ 23,743 ₦ 24,859 ₦ 20,000 65.7% 4,000 ₦ 15,000 ₦ 14,549 ₦ 13,729 ₦ 12,407 ₦ 10,000 3,500 61.3% 53.3% 44.0% ₦ 5,000 ₦0 3,000 Q1 Q2 Q3 Q4 Revenue per tonne EBITDA Per Tonne Volume ('000 tonnes) • Demand
Slide 24: Nigeria cash cost analysis
Nigeria cash cost analysis % of average cash costs per tonne (Nigeria, 2016) Plant general 6% SG&A 12% Direct wages 6% Kiln fuel (cement plant) 36% O&M contract 4% Maintenance 5% Other variable Packaging 3% 9% Power Plant Refractories 12% 1% Gypsum Limestone 4% Mine costs 0.4% 2% Approximately 55%-6
Slide 25: Importance of optimal fuel mix
Importance of optimal fuel mix • Kiln fuel is the major cost of cement production Relative cost of alternative fuels vs gas per • LPFO use hurts margins tonne of clinker • Preference has previously been to run on gas, but: Obajana Ibese • Disruption and maintenance have lead to shortages Own-mined c
Slide 26: Coal programme delivered
Coal programme delivered • All Nigerian kilns now able to run on coal • LPFO use eliminated since Q4 2016 with positive impact on margins • Dangote Industries supplying coal from mines in Kogi from March +47% • Switch to own-mined coal has several benefits +46% • Cheaper and more reliable than gas,
Slide 27: 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 28: Pan-Africa gaining momentum
Pan-Africa gaining momentum • Strong performance despite economic downturn Rest of Africa performance across much of Africa Year ended 2016 2015 Change 31st December • Sales volumes up 54.0% to 8.6Mt (excl. eliminations) Volumes sold (kt) 8,639 5,609 54.0% • Revenues up 88.5% to ₦195.0B • EBITDA up
Slide 29: Country updates
Country updates Cameroon Ethiopia • Nearly 1.1Mt sold in 2016 • Nearly 2.0Mt cement sold in 2016 • Market share 43% • Market share now 24% • Ban on imported cement is opportunity for our clinker • Cement prices fluctuated, averaging $90 and grinding plant to increase sales ending the year at $96, fo
Slide 30: Country updates
Country updates South Africa Zambia • Dangote Cement South Africa increased sales by • Dangote Cement increased sales to nearly 0.8Mt 3.8% during the year • 40% market share • Continued focus on an optimisation programme to • Downturn in copper mining, lower export improve logistics, sales and plant
Slide 31: Update on trading and outlook for 2017
Update on trading and outlook for 2017 • Volume growth expected from: • Increased exports from Nigeria to Ghana • Tanzania ramp-up from 0.6Mt sold in 2016 +47% • New capacity making first contributions +46% • Sierra Leone (0.7Mta) selling cement since February • Congo (1.5Mta) first sales expected A
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: Investor Relations
Investor Relations For further information contact: Carl Franklin Uvie Ibru Head of Investor Relations Investor Relations Dangote Cement Plc Dangote Cement Plc +44 207 399 3070 +44 207 399 3070 +44-7713 634 834 carl.franklin@dangote.com Uvie.ibru@dangote.com www.dangotecement.com @DangoteCement 33