Dangote dissociates border closure to drop in his Cement’s 2019 earnings shock
…But closure forced Dangote cement export to fell 41% in 2019
Contrary to trending news report that one of the key reasons why Dangote Cement experienced drop in profitability for the year 2019 was border closure, President of the Dangote Group, Aliko Dangote, has rejected the conspiracy theory, insisting that border closure policy of the present government has done more good than harm to the economy.
However, fact check showed that within the period, Dangote Cement exports from Nigeria to neighbouring countries fell 41% in 2019 when Nigeria’s government closed the land borders, thus forcing the cement continental giant to plan exporting to west coast from Congo Republic and others to feed West Africa’s markets after all.
Joseph Makoju, Dangote’s outgoing chief executive, said the border closure led exports to drop to 0.5 million tonnes in 2019 from 0.7 million tonnes in both 2018 and 2017. He said the company had exported to West and Central Africa from Nigeria.
Business Hilights recalls that Nigeria shut its land border in August to curb the smuggling of rice to neighbouring states where it sells for more and an illegal arms trade. The closure has also hurt other Nigerian businesses, including cement exports, and stoked inflation.
Notwithstanding, a statement from the group on impacts of border closure brushed aside the insinuations, saying “the border closure policy was the best for the country’s economy at this point in time.”
The group averred that in so far Dangote Cement was building its terminals across Africa; the border closure could not in any way impact negatively on the company’s performance because even Nigerian neighbours’ are free to access the product from other countries where Dangote Cement plant is located.
The statement said, “The Company’s investment across Africa is also bearing the desired results as pan-African sales volume grew in the year 2019, hitting 9.6Mt from 9.4Mt.
“Dangote Cement Plant, Mtwara, Tanzania, recorded an increase of 94 per cent increase in volume within the review period. Dangote Cement Plant, Pout, Senegal put up a remarkable performance with sales up more than 100 per cent of rated capacity.”
Fact checks by Business Hilights Intelligence Unit (BHIU) showed that Dangote Cement’s global operational locations apart from Nigeria can be seen on other nine African countries including Cameroon, Congo, Ethiopia, Senegal, Sierra Leone, South Africa, Tanzania and Zambia.
Additional remarks by the statement issued by Dangote group made it clear that the stock of Dangote Cement had remained dominant on the floor of the Nigerian Stock Exchange, as the news of a robust dividend as announced by the management of the company remains a fact that the border policy never impacted negatively on sales after all.
Business Hilights recalls that the management had approved N16 per share be paid to the shareholders despite the drop in profitability.
In his remarks, the outgoing Group Chief Executive Officer, Engr Joe Makoju, said, “Dangote Cement maintained strong financial performance despite a low growth environment, pricing pressure and increasing competition in key markets.
“The Nigerian operations maintained volume and revenue performance in a challenging environment. Export sales were affected by the border closure in the second half of 2019.”
“Looking ahead, I expect an increase in volumes in 2020 as we commence clinker exports via shipping from Nigeria.
Giving further insights, Engr Makoju revealed that “Pan-Africa volumes were slightly up, notably supported by Tanzania and Senegal. I am glad to report that Tanzania contributed positively at EBITDA level.
“In 2020, I believe Dangote Cement will see an increase in profitability in pan-Africa driven by higher volumes and further efficiency improvements,” Makoju, hands over to Mr Michel Puchercos, former managing director of Lafarge Africa, averred.
