Home Business Why Dangote Cement’s expansion across Africa should worry competitors

Why Dangote Cement’s expansion across Africa should worry competitors

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Dangote Cement’s investments and expansion drive across Africa have been described as strategic and necessary towards the actualisation of economic advancement on the continent, while also ensuring that the Dangote brand becomes the most preferable to most African consumers.

The company’s Group Managing Director, Mr Joseph Makoju, stated this over the weekend when some top management personnel of the Standard Organisation of Nigeria (SON) visited the Ibese Cement Plant on a facility tour.

Makoju, who was represented by Dangote Cement’s National Sales and Distribution Director, Mr Adeyemi Fajobi, also noted that the company’s investments are already contributing to the economic betterment  of the countries where they currently operate.

The GMD also disclosed ongoing plans by the company to further expand into three more African countries over the next few months.

The company currently has operations in fourteen African countries, including Ethiopia where it, unfortunately, faces protracted mining disputes with local youths. The tense controversy recently resulted in a tragedy following the shooting dead of the company’s Country Manager, Deep Kamara.

“In the last 10 years, Dangote Cement has embarked on an aggressive expansion drive, which has seen it having an annual production of cement to the tune of over 29 million metric tonnes from its three production plants in Ibese, Obajana and Gboko, thus effectively eliminating the importation of cement.

“Wherever we operate, we operate as economic partners, because we add value to the economy by creating employment.” – Makoju

Increased business opportunities for Dangote Cement

Meanwhile, asides expanding into other countries, Dangote Cement is also in the business of exporting its products to countries such as Togo, Benin and Ghana. Makoju noted that the exportation helps with foreign exchange generation for Nigeria.

As we reported, the company will also begin the exportation of about 3mnt of clinker per annum to Ghana, Ivory Coast, and Cameron by this coming fourth quarter of 2018.

Note that expansion in other territories, as well as increased exportation of Dangote Cement to other African countries, will altogether improve the company’s revenue and profit, and by extension increase shareholders’ chances of earning higher dividends.

How is the competition faring?

In the light of Dangote’s steady and strategic advancements both within and outside Nigeria, it becomes interesting to examine how the competition is faring. How much of the market do they control? Most importantly, how are they coping with the intense competition as far as revenue generation and profit-making is concerned?

There are other two main players in Nigeria’s in Nigeria cement industry namely- Lafarge Africa Plc and Cement Company of Northern Nigeria Plc. And even though both are doing relatively well, they still have a lot to do in order to advantageously compete with Dangote Cement.

A mere look at the company’s financial reports, for instance, will show the disparity between them. This is because while Dangote Cement realised as much as ₦805 billion in revenue last year, Lafarge Africa Plc only generated ₦299 billion while Cement Company of Northern Nigeria made ₦14 billion.

In terms of profit, Dangote made a profit after tax of ₦204 billion in 2017, while Lafarge Africa Plc and Cement Company of Northern Nigeria Plc made ₦34.6 billion and ₦1.2 billion; respectively.

Dangote Cement currently has the biggest traded stock on the Nigerian Stock Exchange (NSE) by market capitalisation.

Dangote Cement is a subsidiary of Dangote Group. The company was founded in 1992 and is one of the biggest cement producers in the country. The company’s shares traded at ₦225 during today’s session on the NSE.




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