Year ending 31 December 2012 April 2013 Disclaimer This document - - PowerPoint PPT Presentation

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Year ending 31 December 2012 April 2013 Disclaimer This document - - PowerPoint PPT Presentation

Audited Results for the Year ending 31 December 2012 April 2013 Disclaimer This document is not an offer of securities for sale in the United States. Any securities discussed herein have not been and will not be registered under the US


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SLIDE 1

Audited Results

for the

Year ending 31 December 2012

April 2013

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SLIDE 2

Disclaimer

This document is not an offer of securities for sale in the United States. Any securities discussed herein have not been and will not be registered under the US Securities Act of 1933, as amended (the “US Securities Act”) and may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act. No public offering of any securities discussed herein is being made in the United States and the information contained herein does not constitute an offering

  • f securities for sale in the United States, Canada, Australia or Japan. This document is not for distribution directly or indirectly into the United States,

Canada, Australia or Japan or to US persons. This document is addressed only to and directed at persons in member states of the European Economic Area who are “Qualified Investors” within the meaning of Article 2(1)(e) of the Prospectus Directive. In addition, in the United Kingdom, this document is being distributed to and is directed only at Qualified Investors (i) who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the “Order”) or (ii) persons who are high net worth entities falling within Article 49(2) of the Order, or (iii) persons to whom it may otherwise be lawfully communicated (all such persons being referred to as “Relevant Persons”). This document must not be acted on or relied on (i) in the United Kingdom by persons who are not Relevant Persons and (ii) in any member state of the European Economic Area by persons who are not Qualified Investors. By attending this presentation / accepting this document you will be taken to have represented, warranted and undertaken that you are a Relevant Person (as defined above).

Not for distribution directly or indirectly into the United States, Canada, Australia or Japan or to US persons.

2

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SLIDE 3

FY 2012 highlights

Operational

– 11mt new capacity brought onstream, imports ended – Cement sales up 19.9% to nearly 10.4mt – Strong increase despite flooding, sand shortage – 10.2 million tonnes locally produced, up 50% on 2011 – Market share improving to >60%

Financial

– Consolidation of Sephaku, GreenView International Ltd – Consolidated revenue up 23.6% to ₦298.5bn ($1,802m*) – Nigeria revenue up 18.3% to ₦285.6bn – EBITDA up 30.1% to ₦174.1bn, 58.3% margin ($1,098m) – EBIT up 24.4% to ₦146.5bn, 49.1% margin ($920m) – Pre-tax profit up 19.2% to ₦135.6bn ($856m) – Earnings per share up 25.1% to ₦8.92** – Dividend of ₦3.0 per 50 kobo share – Net debt of ₦119.7bn ($755m)

* $1=₦158.5 ** prior-year adjusted for 1-for-10 bonus share as per IAS33 par.28

3

Obajana Obajana Ibese Gboko Gboko Imports 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 2011 2012

Locally produced cement +50% Dangote Cement sales 2011-2012 (kt)

45% 50% 55% 60% 65% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Dangote Cement estimated market share 2012

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SLIDE 4

2012 market developments

  • New capacity brings self sufficiency

– 11mt at Ibese and Obajana – Ramping up throughout 2012

  • Gas distribution problems impact margins

– Upgrade completed but some problems remain

  • Unprecedented flooding affects demand

– Kogi, Benue particularly badly hit – Reduced building work – Distribution made difficult by flooded roads – Sand shortage a serious problem – Producers left with clinker mountains in Q4

  • Imports fall but are increasingly damaging

– No longer needed in self-sufficient market – Continuing importation impacts local manufacturers that have invested $billions in new capacity 4

Total Nigerian Cement sales 2004-2012 (mt)

2.3 2.7 3.3 4.7 6.2 8.0 10.1 12.0 16.4 6.1 6.6 6.8 6.3 7.2 6.8 5.7 5.2 1.9 2 4 6 8 10 12 14 16 18 20 2004 2005 2006 2007 2008 2009 2010 2011 2012

Manufactured Imported

10.2% CAGR

Source: Dangote Cement estimates

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SLIDE 5

Total Nigerian market volume

5

1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

FY 2013 FY 2012 FY 2011 FY 2010 000 tonnes Flooding Xmas ‘Monday’ effect

Source: Dangote Cement estimates

Strong start in 2013

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SLIDE 6

Outperforming the market

6

  • 20%
  • 10%

0% 10% 20% 30% 40% 50% 60% 70%

Dangote Cement sales Total Nigerian cement market

Source: Dangote Cement estimates

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SLIDE 7

Outperforming the market

7

14.4%

  • 3.9%

27.9% 9.5% 8.8% 51.6% 10.5% 18.1%

  • 10%

0% 10% 20% 30% 40% 50% 60%

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012

Real GDP Building & Construction Real Estate Cement consumption Dangote Cement volumes Linear (Dangote Cement volumes)

Sources: National Bureau of Statistics, Dangote Cement estimates

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SLIDE 8

Operational performance

  • Obajana

– 5mt new capacity added in Q1 2012 – Cement sales up 12.8% to 5.7mt – Higher fuel cost per tonne as gas pressure fell – Covered sales to Gboko catchment in December

  • Ibese

– 6mt new capacity serving key markets – Good start to production; 2.8mt sold – Affected by gas problems; 79% average – Ideal location for road exports e.g. Ghana

  • Gboko

– Cement sales 5.1% down at 1.6mt – Mothballed early December owing to surplus – Reopened February 2013 as demand increased 8

Cement sales by plant in 2012 (kt)

500 1,000 1,500 2,000 2,500 3,000

Q1 Q2 Q3 Q4 Obajana Ibese Gboko

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SLIDE 9

Strong growth in 2012

9

Consolidated Group accounts Year ending December (₦bn)

2011 2012

% change

Comments

Revenue

241.5 298.5 23.6%

Includes first-time contribution of ₦12.2bn from Ghana. Cost of sales

  • 97.7
  • 118.3

21.1%

Gross profit

143.7 177.7 25.4%

Gross margin

59.5% 60.4% 0.9pp

EBITDA

133.8 174.1 30.1%

EBITDA margin

55.4% 58.3% 2.9pp

Improvement reflects lower imports, more gas-fired cement in sales mix EBIT

117.7 146.5 24.4%

EBIT margin

48.8% 49.1% 0.3pp

Net interest

  • 4.0
  • 10.8

173.7%

Profit before tax

113.8 135.6 19.2%

Taxation

7.6 16.3 113.3%

Net profit

121.4 151.9 25.1%

Earnings per share

7.1 8.9 25.1%

Adjusted for 1-for-10 bonus issue, as per IAS38

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SLIDE 10

Impact of gas on margins

  • Group achieved strong margins despite

sub-optimal gas mix for most of 2012

  • Nationwide gas distribution issues being

addressed by infrastructure upgrade

  • But regional problems still persist
  • Higher gas cost at Ibese reflects different

gas contract and raw material

  • Strong upside potential for margins

as gas supply returns to normal

  • Budgeting for 80% gas in 2013

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Average monthly gas utilisation in 2012 %

30% 40% 50% 60% 70% 80% 90% 100% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ibese Obajana

1 2 3 4 5 6 7

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Obajana Ibese

Relative cost of LPFO vs Gas per tonne of clinker

% gas used in kiln

Relative cost of LPFO (x)

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SLIDE 11

Strong balance sheet

11

Year ending December (₦bn)

2011 2012 Comments

Non-current assets 459.9 549.8 Current assets 66.6 123.9 Total assets 526.5 673.7 Equity 281.8 412.8 Non-current liabilities 120.3 117.6 Current liabilities 115.8 136.0 Total equity & liabilities 526.5 673.7 Cash 22.8 44.4 Short-term debt 35.0 51.7 Long-term debt 116.8 112.5 Net debt 128.9 119.7 EBITDA 133.8 174.1 Net debt / EBITDA 0.96x 0.69x Well below industry’s long-run average of 2.5x Interest cover 29.7x 13.5x Strong interest cover Gearing ratio 0.29x 0.44x

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SLIDE 12

Update on Africa

  • Senegal

– Factory and power plant complete – Land dispute now before Supreme Court – Plant shuttered by order of local authority pending resolution – After resolution, plant will take around 40 days to commission – Cement production possible with imported clinker

  • South Africa

– Good progress in building work, no major delays – Production expected by March 2014, if not sooner – Clinker production at Aganang integrated plant – Cement production at Aganang and Demas grinding plant 12

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SLIDE 13

Update on Africa

13

Country Capacity (mt) Expected production Comments Cameroon 3,000t/day H1 2014 Construction of grinding plant in progress.

  • Rep. Congo

1.5 Late 2015 Tendering underway. Ethiopia 2.5 Early 2015 Building work on schedule. No major problems. Gabon TBC TBC Change of scope to grinding only. In process of acquiring suitable land. Tanzania 3 Mid 2015 Work has commenced. Zambia 1.5 Late 2014 Work underway on a 1.5mmtpa plant at Ndola. Group considering the merits of building second 1.5mmtpa plant in Lusaka, but no contracts have yet been signed.

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SLIDE 14

Export strategy progressing

  • Ghana

– Continue to import from Far East on existing contract – Successfully tested logistics and product from Ibese, Nigeria – Expecting to improve volume by taking market share in a growing market – Increasing packing capacity and bulk loading facilities – Support in logistics by increasing bulk and flatbed trucks in Ghana

  • Benin, Togo, Chad, Niger

– Road exports already tested from Ibese – Not large markets but have established relationships in all countries

  • Sierra Leone: building work underway on import facilities and packing plant
  • Liberia: Advanced plans for import terminal, equipment ordered, dredging underway
  • Ivory Coast: Acquiring land suitable for cement production (grinding plant)
  • Nigerian export terminals

– Development of export terminals in progress at Apapa and Onne for export of cement and clinker – To be operational in 2014

14

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SLIDE 15

Summary

  • New capacity extends market leadership

– Expect to increase share of volumes in 2013 – Imports now unnecessary and damaging to local producers

  • Good performance despite unforeseen challenges of flooding and gas
  • Steady progress in Africa with projects coming onstream from 2013/14
  • Strong balance sheet, ample headroom to increase debt
  • Outlook

– Good start to 2013 with demand recovering – Market up nearly 16% in Q1 2013 – Gas problems may persist: assume 80% gas ratio in 2013 – Resolution of legal issues in Senegal expected soon – Exports underway, modest contribution to 2013 sales 15

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SLIDE 16

Investor relations

For further information contact: Carl Franklin Head of Investor Relations Dangote Cement +44 207 399 3070 +44-7713634 834 carl.franklin@dangote.com

Broker Analyst Location ARM Research Oyinda Olanrewaju Lagos Chapel Hill Denham Eniola Taiwo Lagos CSL FCMB Guy Czartoryski London/Lagos Exotix Andy Gboka London FBN Capital Tunde Abidoye Lagos Imara Securities Belvas Otieno Harare Renaissance Capital Roy Mutooni Johannesburg StanbicIBTC Tomi Benn-Gii Lagos Vetiva Tosin Ojo Lagos

Equity research is provided by the following analysts: 16 Uvie Ibru Investor Relations Dangote Cement +44 207 399 3070 +44 7747 027 895 uvie.ibru@dangote.com

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SLIDE 17

Appendix

17

  • Total production capacity could be

about 55 million tonnes by the end

  • f 2015, based on currently visible

projects, but actual production will depend on speed of ramp-up in 14/15/16

  • Even assuming just 10% CAGR in

demand for cement and 100% utilisation rates, Nigerian demand for cement could outstrip this planned new capacity by 2023

  • At faster demand growth or lower

utilisation rates, Nigeria will need new capacity even earlier – perhaps as early as 2020?

10 20 30 40 50 60 70 80

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Capacity at 100% 8% 10% 12% 14% Growth in cement consumption

80% capacity

Export potential