Displaying items by tag: Nigeria
Nigerian government looks into complaints about quarry at Lafarge Africa’s Ewekoro plant
19 November 2018Nigeria: The Federal Government says it is investigating complaints from residents at Akinbo village near to the quarry of Lafarge Africa’s Ewekoro cement plant in Ogun State. Local residents have complained about breeches of local environmental legislation at the site, according to the Vanguard newspaper. Adegboyega Salam, the Director of Mines Environmental Compliance Department from the Federal Ministry of Mines and Steel Development, said that the issue was related to relocation of the community. He added that he had asked Lafarge Africa for comment. The dispute relates to an agreement between the cement producer and the local community in 2012.
ARM Cement approach Dangote Cement about potential sale
09 November 2018Kenya: Advisors to ARM Cement have approached Nigeria’s Dangote Cement about a potential sale, according to a source quoted by Reuters. The news follows reporting by Bloomberg that Dangote Cement has expressed an interest in the Kenyan cement producer. Owner Aliko Dangote also said in an interview that his company was in talks with an unnamed company about potential acquisition in Kenya and Tanzania. ARM Cement was placed in administration in August 2018.
BUA Group completes upgrade at Obu plant
09 November 2018Nigeria: BUA Group has completed an upgrade at its Obu plant at Okpella in Edo State. The new 3Mt/yr production line has increased the plant’s production capacity to 6Mt/yr, according to the Punch newspaper. The completed project follows the inauguration of the company’s new 1.5Mt/yr production line at its Kalambaina cement plant in Sokoto State.
Nigerian sales grow for Dangote Cement so far in 2018
29 October 2018Nigeria: Domestic sales volumes of cement by Dangote Cement grew by 11.7% year-on-year to 10.8Mt in the first nine months of 2018, from 9.6Mt in the same period in 2017. However, sales in Sub-Saharan Africa grew slightly to 7Mt due to lower sales in Tanzania, disruptions due to civil unrest in Ethiopia and a reduction in exports from Nigeria to Ghana. This was mitigated by growing sales volumes in Zambia. Sierra Leone and the start-up of operations in the Republic of Congo. The cement company’s revenue rose by 13.5% to US$1.89bn from US$1.66bn and its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 14.6% to US$928m from US$810m.
“Nigerian sales were affected by serious flooding in September 2018 and although Pan-African sales were flat, we will see soon increased sales from Tanzania, now that its gas turbines are installed, and from Ethiopia as local community issues are resolved. We have launched new products in Nigeria that we believe will help us improve our leadership position in Africa’s most exciting market for cement,” said Joe Makoju, Group Chief Executive Officer (CEO).
Nigerian sales boost Lafarge Africa’s sales so far in 2018
18 October 2018Nigeria: Sales in Nigeria have boosted Lafarge Africa’s sales revenue so far in 2018. It added that increasing prices in South Africa had also helped. The cement producer’s sales rose by 5% year-on-year to US$643m in the first nine months of 2018 from US$614m in the same period in 2017. However, its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 8% to US$115m from US$124m due to poor performance in South Africa in the first half of the year.
“We continued to deliver strong margins in our Nigerian business as a result of our successful commercial strategies with improved product visibility and the fast tracking of the new route to market. Our energy efficiency plan translated in increased use of alternative fuel and coal,” said Michel Puchercos, the chief executive officer (CEO) of Lafarge Africa.
CCNN receives clearance for merger with Kalambaina Cement
16 October 2018Nigeria: The Cement Company of Northern Nigeria (CCNN) says it has received clearance by the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) for its proposed merger with Kalambaina Cement. Following the merger all of the assets, liabilities, licences and undertakings will be taken over by the CCNN, according to the Punch newspaper. The completion of the proposed merger is subject to the approval of the shareholders of the CCNN and Kalambaina Cement and the final regulatory approvals from SEC, the NSE, Federal Inland Revenue Service and the Federal High Court.
Lafarge Africa – was it worth it?
19 September 2018Nigerian financial analysts Cordros Securities concluded this week that the merger of some of Lafarge’s Sub-Saharan African businesses had reduced earnings at Lafarge Africa. The report is interesting because it explicitly points out a situation where the consolidation of some of Lafarge’s various companies have failed in the wake of the formation of LafargeHolcim.
Cordros Securities’ criticism is that Nigeria’s Lafarge WAPCO performed better in 2013 alone before it became part of Lafarge Africa, with a higher standalone earnings before interest, taxation, depreciation and amortisation (EBITDA) margin. Lafarge Africa formed in 2014, a year before the LafargeHolcim merger was completed, through the consolidation of Lafarge South Africa, United Cement Company of Nigeria, Ashakacem and Atlas Cement into Lafarge WAPCO. Since the formation of Lafarge Africa, Cordros maintains that its earnings per share have consistently fallen, its share price has dropped, its debt has risen, its margins have decreased and its sales volumes of cement have also withered.
Cordros mainly focuses on the Nigerian parts of Lafarge Africa’s business, given its interest in that market and the fact that about three quarters of the company is based in the country. It blames the current situation on growing operating costs since the merger, skyrocketing financing costs for debts and efficiency issues. In Nigeria, Lafarge Africa has had to cope with disruptions to gas supplies. Nigeria’s Dangote Cement had similar problems domestically in 2017 with falling cement sales volumes in a market reeling from an economic recession but Cordros reckoned that Dangote is picking up market share in the South West due to an ‘aggressive retail penetration’ strategy. Finally, Lafarge Africa faced a US$9m impairment in 2017 due to its abandoned pre-heater upgrade project at AshakaCem. The project has been suspended since 2009 due to security concerns in the North-East region. The plant faced an attack by the Boko Haram militant group in 2014 and the group has seemed reluctant to invest further in the site subsequently.
Cordros’ final word on the matter is that with the Nigerian cement market performing slower than it has previously, the local market has become a battleground between the established players of Dangote Cement, BUA Group and Lafarge Africa. What little the report does have on South Africa covers problems with old and inefficient hardware, labour disputes, low prices due to weak demand, high competition and a negative product mix.
Lafarge Africa itself presents a more mixed picture, with market growth picking up in Nigeria following end of the recession but continued market problems in South Africa. Overall, its reported sales grew by 4.8% to US$448m in the first half of 2018 but its EBITDA fell by 25% to US$76.4m. Overall cement sales volumes were reported as up by 5.4% to 2.6Mt in the first half but volumes were still falling in South Africa in the second quarter.
Part of the backdrop to all of this is the intention of Lafarge Africa to cut its debt. In May 2018 its chairman Mobolaji Balogun said that the company wanted to cut its debts by 2020 before continuing with its expansion programme. Part of this process will include a new rights issue later in 2018 to allow shareholders to buy stock at a discount.
It must have made sense, on paper at least, to merge the Lafarge subsidiaries in the two largest economies in Sub-Saharan Africa. Once the merger had settled in, with synergies generating extra revenue, the group could have considered adding extra territories such as Kenya. However, it’s not turned out like that. Two recessions in Nigeria and South Africa respectively, old equipment, debt and serious competition from locally owned producers have piled on the pressure instead. From a stockholder perspective, Cordros is not impressed by the performance of Lafarge Africa. The wider question is: what else did Lafarge and Holcim get wrong when they joined to form LafargeHolcim?
Dangote launches block moulding cement product
19 September 2018Nigeria: Dangote Cement has formally launched BlocMaster Cement product in Kano. The new cement product is described as ‘extra strong’ and targeted at block moulders, according to the Vanguard newspaper. At the official launch event Joe Makoju, the group managing director of Dangote Cement, said the new brand had followed ‘years’ of research and that it had been tested and approved by builders in the country.
Nigerian analysts blame earnings loss at Lafarge Africa on merger
17 September 2018Nigeria: Financial analysts Cordros Securities have blamed falling earnings at Lafarge Africa on the merger of its Nigerian businesses with Lafarge South Africa. In a research report the analysts found that the merger increased operating costs and reduced shareholder value, according to the Vanguard newspaper. Lafarge WAPCO’s earnings per share, earnings before interest, taxation, depreciation and amortisation (EBITDA) and profit before tax have all fallen since 2013. It also found that operating costs had increased ‘significantly’ following the merger, debt had risen and that earnings had also been hit by efficiency issues.
Lafarge announced plants to merge its businesses in Nigeria and South Africa in 2014. The move saw the consolidation of Lafarge South Africa, United Cement Company of Nigeria, Ashakacem and Atlas Cement to Lafarge WAPCO. It was subsequently renamed Lafarge Africa.
BUA announces plant for Ebonyi State
06 September 2018Nigeria: BUA Group has announced that it will commence core drilling in Ebonyi State, prior to establishing a greenfield cement plant there. Speaking in the state capital Abakalik on 5 September 2018, BUA’s Managing Director Kabiru Rabiu said that he was surprised there was no cement plant already in the state, despite there being enormous limestone deposits. Ibeto Cement is in the process of setting up two integrated cement plants in the state.
"We are here because the state is blessed,” said Rabiu. “It has a huge deposit of limestone that is very high in quality. The state also has coal, which is necessary for cement production. The state is strategically located; it is close to Enugu, close to Cross River State and close to the Middle Belt.”