Dangote Cement Plc · NSENG:DANGCEM
Dangote Cement — FY2018 Earnings Presentation
44 slides from Dangote Cement's earnings presentation, Feb 27, 2019
Slide 1: Audited Results for the Year Ended 31st December 2018
Wa RASA eS SDAA C' Building Prosperity in Africa AUDITED RESULTS FOR THE YEAR ENDED 315! DECEMBER 2018 277 FEBRUARY 2019 4 “ : ©, Aa 7) WAS VS oy, @dangotecement y vwwnn-dangotecementcom |[__] DANGOTE == CEMENT
Slide 2: Overview of Dangote Cement
Overview of Dangote Cement < DANGOTE CEMENT Sub-Saharan Africa's largest cement producer Largest company in West Africa by market capitalisation; 3,280bn / US$9.1bn* Subsidiary of Industries Limited, a leading African conglomerate Excellent financial performance with exceptional FY 2018 EBITDA margi
Slide 3: Our Capacity
Our Capacity oAsere CEMENT SENEGAL : Me ETHIOPIA 1.5Mta 4 Z 2.5Mta INTEGRATED Ue : j INTEGRATED CONGO SIERRA LEONE mee 1.5Mta 0.5Mta : _ INTEGRATED IMPORT : \ 4 TANZANIA ¢ 4 3.0Mta GHANA j INTEGRATED 1.5Mta NIGERIA J ZAMBIA IMPORT 29.3Mta . 1.5Mta INTEGRATED INTEGRATED CAMEROON 1.5Mta CLINKER GRINDI
Slide 4: Strong Financial Performance
Strong Financial Performance oAsere CEMENT 2012 2013 2014 2015 2016 2017 2018 Revenue EBITDA Cash flow from operations mCapex mDividend paid Investor Presentation I reseconen ret
Slide 5: Strong Volume Growth
Strong Volume Growth Million tonnes 25 20 15 10 14.9% CAGR 2010 2011 MNigeria ™ Cameroon 2012 mCongo Ethiopia 2013 2014 Ghana Senegal SR DANGOTE CEMENT 2015 2016 2017 2018 WSierra Leone mSouth Africa m Tanzania ™Zambia Investor Presentation
Slide 6: Why Cement in Sub-Saharan Africa?
Why Cement in Sub-Saharan Africa? oAsere CEMENT Cement is an essential building material Sub-Saharan Africa significantly lags with no viable substitutes, Africa needs —————* *——— global average per-capita cement billions of tonnes in coming decades consumption FUTURE DEMAND DCP's key markets are Ni
Slide 7: African Cement Market
African Cement Market Positive Long-Term Mega Trends + Increasing demand for cement as urbanisation continues across the continent, demanding more infrastructure, housing and commercial building + Increasing political stability enabling rapid economic growth * Steady population growth, younger and m
Slide 8: Per-capita cement consumption by region
4,500 140 4,000 120 3,500 100 3,000 2,500 80 2,000 60 1,500 40 1,000 20 500 0 0 2010 2011 2012 2013 2014 2015 2016E 2017F 2018F Australasia Central America Central Europe Eastern Europe Indian Sub-continent Middle East North Africa North America North Asia South America South Asia Sub-Saharan Africa
Slide 9: Cement consumption (Mt)
70 60 Cement consumption (Mt) 50 40 30 20 10 0 2012 2013 2014 2015 2016 2017 2018E Cameroon Congo Ethiopia Ghana Nigeria Senegal Sierra Leone South Africa Tanzania Zambia
Slide 10: Strategic Raw Material Access
Strategic Raw Material Access oAsere CEMENT * 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 v centres, fuel and dist
Slide 11: Dangote Cement Capacity by Country
#1 48.0Mta #4 17.5Mta #1 15.2Mta #1 11.1Mta Dangote Cement Capacity #3 9.9Mta #3 8.2Mta #1 4.9Mta #2 4.3Mta #1 3.2Mta #1 1.6Mta
Slide 12: Capacity Share by Country
• • • • • • • 61% Capacity Share • 22% 17% Capacity Share Capacity Share • <1% of Capacity Share • •
Slide 13: Manufactured vs Imported Cement
25 Manufactured Imported 20 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 2017 2018
Slide 14: Nigerian market dynamics
Nigerian market dynamics Dangote Cement sales by region, 2018 North East 6.2% North West 7.2% Lagos 27.7% South East 13.8% DANGOTE CEMENT South West 14.6% South South 15.7% Source: Dangote Cement SR DANGOTE CEMENT Nigeria plant locations, 2018 Source: Dangote Cement, company websites Company Key Pla
Slide 15: Strategic Goals
Strategic Goals oAsere CEMENT OUR OUR VISION To be a global leader in cement production, recognised for the quality of our products and services and for the way we conduct our business GOAL To deliver superior and sustainable risk-adjusted returns on our investments Strategic Pillars Focus on Contin
Slide 16: High Level of Business Integration
High Level of Business Integration Aare CEMENT Operating Challenges in Africa * Developed internal power generation capabilities to become self- : 1. sufficient in markets where the electrical grid is poorly developed or Power Availability nonexistent * On-site power plants at production facilities
Slide 17: Competitive Advantages
Competitive Advantages Investor Presentation BUYING POWER Cuts procurement costs, increases returns FAVOURABLE MARKETS Incentives, fragmented industry LARGER PLANTS Economies in procurement, operations NEW MINES Easier and cheaper access to materials MODERN TECHNOLOGIES Higher efficiency, lower-cost
Slide 18: Strong Governance Framework
Strong Governance Framework Board of Directors (includes five Independent Directors) Aliko Dangote (’) Joseph Makoju (CEO) Brian Egan (CFO) Olakunle Alake Cherie Blair* Sani Dangote Abdu Dantata Mick Davis* Emest Ebi* Devakumar Edwin Emmanuel Ikazoboh* Fidelis Madavo Viswanathan Shankar Dorothy Ufot
Slide 19: Executive Management
Group Chief Executive Officer Group Chief Financial Officer • • • • • Chief Operating Officer Director of Operations, Nigeria Director of Operations, Pan-Africa Group Chief Sales & Marketing Officer • • • • • • • •
Slide 20: Board of Directors
Chairman Group Chief Executive Officer Group Chief Financial Officer Non-Executive Director • • • • • • • • • • Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director Non-Executive Director • • • • • • •
Slide 21: Board of Directors (continued)
Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director • • • • • • • Non-Executive Director Non-Executive Director Non-Executive Director • • • • • •
Slide 22: Plant Capacities
Capacity: 13.3Mta Capacity: 12.0Mta Capacity: 4.0Mta Capacity: 1.5Mta Capacity: 1.5Mta Capacity: 1.5Mta Capacity: 1.5Mta Capacity: 0.5Mta Capacity: 2.8Mta Capacity: 1.5Mta Capacity: 2.5Mta Capacity: 3.0Mta
Slide 23: FY 2018 Highlights
FY 2018 Highlights FINANCIAL * Group revenue up 11.9% * Group EBITDA up 12.1% — Margin of 48.3% * EPS up 95.9% to $22.83 * Net debt of 8168.4B — 0.39x EBITDA * Dividend of 816.00 per 50 kobo share up 52.4% on 2017 OPERATIONAL * Group volumes up 7.4% * Nigeria volumes up 11.4% — Strong market growth
Slide 24: ₦m ₦m ₦m ₦m ₦m ₦m
₦m ₦m ₦m ₦m ₦m ₦m ₦m ₦m ₦m ₦m ₦m ₦m % % % % % %
Slide 25: FY 2018 Group Financial Overview
FY 2018 Group Financial Overview Year to 2018 2017 31st December Nm Nm | % change Revenue 901,213 805,582 11.9% Cost of sales (383,311) (351,290) 9.1% Gross profit 517,902 454,292 14.0% Gross margin 57.5% 56.4% 1.1pp EBITDA 435,261 388,147 12.1% EBITDA margin 48.3% 48.2% 0.1pp EBIT 338,698 304,208 1
Slide 26: Group EBITDA Development
Group EBITDA Development ott “ Mi increase Mi Decrease Mi Total 61.3 450 a 400 397.4 12.2 10) 350 300 © 250 = 200 150 100 50 0 Nigeria Cameroon Congo, Central costs Total Ethiopia Ghana Senegal Sierra Leone | South Africa Tanzania Zambia * star-ups * Factors affecting EBITDA in shortmedium term incl
Slide 27: Group Financial Overview
Group Financial Overview «..::: ott cEMENT Cash Debt Net debt Loans by Short-term Long-term Total Nm Nm Nm currency NB NB NB As at 31st December 2017 168,387 (372,094) (203,707) US$ 75 28 102 Cash generated from operations . before changes in working 424,416 - 424,416 Rete 82 62 144 capital pt Rand
Slide 28: Group Financial Overview: Balance Sheet
Group Financial Overview «..::: Balance Sheet As at 31/12/18 As at 31/12/17 sm sm Property, plant and equipment 1,171,864 1,192,140 Other non-current assets 87,792 57,089 Intangible Assets 5,969 6,355 Total non-current assets 1,265,625 1,255,584 Current Assets 261,942 241,912 Cash and Cash Equivalen
Slide 29: Solid 2018 Nigeria Performance
Solid 2018 Nigeria Performance isere CEMENT * Overall Nigerian market growth remains good | Quarterly sales ('000 tonnes) | ; ly sales (‘ — Estimated 11.0% growth to 20.7Mt across market 5000 Cine incnyy Salles (COO) Garces) — Q3 affected by heavy rain, flooding, especially September , : — 1.5Mta ne
Slide 30: Revenue and EBITDA per tonne
₦ 50,000 5,000 ₦ 45,000 ₦ 40,000 ₦ 43,816 ₦ 44,311 4,500 ₦ 45,070 ₦ 44,960 ₦ 44,023 ₦ 43,187 ₦ 42,947 ₦ 35,000 ₦ 40,412 66.3% 65.5% ₦ 30,000 64.8% 65.7% 64.4% 4,000 ₦ 37,817 66.3% 62.4% 62.0% ₦ 25,000 65.7% ₦ 28,972 ₦ 26,622 ₦ 28,192 ₦ 29,630 ₦ 20,000 ₦ 23,743 ₦ 29,059 ₦26,952 3,500 ₦ 29,176 ₦ 29,03
Slide 31: Nigeria Price Development
Nigeria Price Development oAsere CEMENT Ex-factory price after discounts and other rebates 2,200 $200 1,600 "aes $180 | \ [ cS $160 i a ——— JX $140 ; $120 § 1,400 $100 § 1,200 V << $80 1,000 $60 N eRe cn ge SS OA en ee RETO GEC EIT = OARS Oren, Coe Cue CEO FO Se SF KF SF FST SF FK KF SF KK YK SKF KY
Slide 32: Kilns Running on Nigerian Gas and Coal
SR so a a s Kilns Running on Nigerian Gas and Coal DANGOTE CEMENT Year to 31st December Obajana Ibese 2018 2017 2018 2017 Gas 53% 60% 72% 61% Coal 47% 38% 28% 38% LPFO - 2% - 1% Relative cost of fuels vs gas per tonne of clinker As at 315t December 2018 Obajana Ibese Own-mined/Nigerian coal 0.7x 0.8
Slide 33: Nigeria Cash Cost Analysis
Nigeria Cash Cost Analysis xed Kiln Fuel a Power Plant Production Wages & Salaries Maintenance Manpower DANGOTE CEMENT Maintenance _ Contract te Mine Costs Cash cost was approximately $32.0/tonne in FY 2018 65% of cash costs are US Dollar based, though less than 20% paid in Dollars Investor Presenta
Slide 34: Nigeria strategy for 2019
Nigeria strategy for 2019 * Good potential for sales increase in 2019 — Postelection confidence — Flood repairs, project pick-up — Nigerian domestic sales up more than 10% by mid-February — Increase export sales when facilities open * FG focus on infrastructure — $2.9 trillion in 2019 budget — Focus
Slide 35: Pan-Africa Revenues Up
Pan-Africa Revenues Up * Sales volumes unchanged at 9.4Mt * Revenues up 9.6% to 8283.3B * EBITDA up 28.2% to ®49.1B — 17.3% margin * Zambia volumes up 28.0% * Senegal volumes up 9.3% Pan-Africa performance Year to 315t December 2018 2017 Change Volumes sold (Kt) 9,370 9,365 0.0% Revenue (Sm) 283,262
Slide 36: Country Updates: Cameroon, Congo, Ethiopia
Country Updates Cameroon Economy remains strong; expected to have achieved 3.8% growth in 2018 Estimate total market for cement was 2.9Mt Dangote Cement sales down marginally to 1.2Mt Market share of 41% Cement priced at $107/tonne Increase in housing and infrastructure projects Our 1.5Mt plant is t
Slide 37: Country Updates: Ghana, Senegal, Sierra Leone
Country Updates Strong economy and cement demand Dangote Cement sales of 763Kt Replacing importation of cement by road from Nigeria with cement imported by sea Ex-factory pricing of $100/tonne, following a 10% price increase Efficiency initiatives included reducing customer waiting and collection ti
Slide 38: Country Updates: South Africa, Tanzania, Zambia
South Africa Tanzania Zambia
Slide 39: Appendix
Appendix Investor Presentation — PE vai SW DANGOTE CEMENT
Slide 40: Pan-African Tax Exemptions
Pan-African Tax Exemptions pase CEMENT Full exemption 50% exemption 25% exemption Investor Presentation
Slide 41: Regional Cement Consumption Trends
Regional Cement Consumption Trends SR DANGOTE CEMENT 2010 2011 2012 2013 2014 2015 2016E 2017 2018E —CAGR 2010-18F Mt Mt Mt Mt Mt Mt Mt Mt Mt % Australasia 13.1 13.2 119 10.5 11.2 113 114 11.8 12.0 -1.19% Central America 50.3 517 53.4 52.9 55.0 58.1 59.1 60.6 613 2.5% Central Europe 43.1 46.5 42.5 4
Slide 42: Investment in Plants
Investment in Plants oestE CEMENT $m Obajana 1,895 Ibese 1,440 Gboko 561 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 AL | NB. Total investment in Nigeria is $5.3B including coal mills, logistics and other
Slide 43: Country Statistics & Information
Country Statistics & Information oAsere CEMENT Cameroon Congo Ethiopia Ghana Nigeria Senegal SierraLeone South Africa. Tanzania Zambia Demographic & economic 24.1 5S 105 28.8 198.0 15.8 76 56.7 60.0 17.0 4.0% 0.7% 8.5% 6.3% 2.1% 7.0% 3.5% 1.5% 6.4% 4.0% 52.0% 64.0% 17.0% 51.0% 50.0% 47.0% 41.0% 62.0
Slide 44: Investor Relations Contacts
Investor relations Contacts