Audited results for the year ended 31 st December th February 2017

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Transcription:

Audited results for the year ended 31 st December 2016 28 th February 2017

Highlights of 2016 Financial results Revenue up 25.1% to 615.1B Strong increase in Q4 EBITDA after price increase EPS up 4.5% to 11.34 Dividend up 6.25% to 8.5 per share, 74.9% payout ratio Net debt of 240.8B, or 0.94x EBITDA Year to 31 st December Regional revenues ( B) 2016 2015 Change Nigeria 426.1 389.2 9.5% Pan Africa 195.0 103.5 88.5% Inter-company sales (6.1) (1.0) 526% Total 615.1 491.7 25.1% Operational highlights Dangote Cement s export sales transform Nigeria into net exporter of cement Overall Group volumes up 25.0% to 23.6Mt Record sales volumes in Nigerian market, up 13.8% to 15.1Mt Pan Africa sales volumes up 54.0% to 8.6Mt Good start in Tanzania with rapid gains in market share Gaining/consolidating share across Africa Coal conversions completed in Nigeria, LPFO no longer used Regional sales volumes ( 000 tonnes) +00.0% 25,000 20,000 8,639 15,000 5,609 10,000 13,290 15,128 5,000 +45.4% 0 2015 2016 Nigeria Pan-Africa Before inter-company eliminations 2

Financial overview Income Statement Year ended 31 st December 2016 2015 B B % change Comments Revenue 615.1 491.7 25.1% Driven by strong volume growth Cost of sales (323.8) (201.8) 60.5% Gross profit 291.3 289.9 0.5% Gross margin 47.4% 59.0% EBITDA 257.2 262.4 (2.0%) Lower average pricing, unfavourable fuel mix, Pan-Africa dilution EBITDA margin 41.8% 53.4% EBIT 182.5 207.8 (12.2%) EBIT margin 29.7% 42.3% Net finance income (1.6) (19.5) (92.0%) Includes net FX gain of 41B Profit before tax 180.9 188.3 (3.9%) Income tax (expense)/credit 5.7 (7.0) 2% effective tax rate in Nigeria Profit for the period 186.6 181.3 2.9% Earnings per share 11.34 10.86 4.5% Dividend per share 8.5 8.0 6.25% 3

Financial overview (cont d) Movement in net debt Cash B Debt B Net debt B As at 1st January 2016 40.8 (245.0) (204.2) Cash generated from operations before changes in working capital 243.9 243.9 Changes in working capital 35.9 35.9 Income tax paid (1.1) (1.1) Additions to fixed assets* (136.2) (136.2) Other investing activities (0.7) (0.7) Change in non-current prepayments 17.3 17.3 Net interest payments** (36.4) (36.4) Net loans obtained (repaid) 84.2 (84.2) - Other cash and non-cash movements 4.4 (27.3) (22.9) Dividend paid (136.3) (136.3) As at 31 st December 2016 115.7 (356.5) 240.8 *Completion of Tanzania, Congo, Sierra Leone, coal conversions and trucks **Average rate on loans is 13% 4

Financial overview (cont d) Balance sheet As at As at 31/12/16 31/12/15 B B Property, plant and equipment 1,155.7 917.2 Other non-current assets 64.9 25.1 Intangible assets 4.1 2.6 Current assets 187.5 125.2 Cash and cash equivalents 115.7 40.8 Total Assets 1,527.9 1,110.9 Non-current liabilities 65.8 57.2 Current liabilities 308.3 164.1 Debt 356.5 245.0 Total liabilities 730.6 466.2 Net Assets 797.3 644.7 Net debt as % of net assets 30.2% 31.2% 5

Analysis of debt bn Short-term* Long-term Total % Naira 146.6 78.3 224.8 63.1% US$ 57.4-57.4 16.1% Rand - 50.2 50.2 14.1% Other - 24.0 24.0 6.7% Total 204.0 152.4 356.4 100% 57.2% 42.8% 100% *Including overdraft DCP has low US$ debt exposure US$ debt is mainly in relation to LCs ( 47.6B) DCP Nigeria lends funds to country operations in US$, which results in gain on translation as Naira devalues 6

Strong Nigeria performance Record FY sales up 13.8% to 15.1Mt including exports 14.8Mt sold within Nigeria, despite recession Sharp increase in Q4 EBITDA/tonne after price increase Most of uplift was from pricing, but cheaper fuel mix helped Nigeria transformed into net exporter of cement Exports of 366kt higher than imports of c350kt Coal now available for all Nigerian kilns Own-mined coal expected soon Advantage of self-sufficiency and reduced need for FX Strong marketing activity, 15,000 retailers now active National promotions reward consumers and retailers Strong brand recognition 65% of volumes delivered to customers by own trucks 241,000km covered Year to 31st December Nigeria performance 2016 2015 Change Volumes* (kt) 15,128 13,290 13.8% Revenue* ( B) 426.1 389.2 9.5% EBITDA* ( B) 242.0 247.5 (2.2%) EBITDA margin 56.8% 63.6% * Excl. corporate costs and inter-company eliminations (see note 4 to accts) 5,000 4,000 3,000 2,000 1,000 Quarterly sales ( 000 tonnes) 0 Q1 Q2 Q3 Q4 2014 2015 2016 7

Nigeria sales by market Exports 2% Corporate 2% South West 15% South South 17% North Central 13% North East 7% North West 9% South East 13% Lagos & Ogun 22% 8

Price evolution Ex-factory price before discounts (excl. VAT) 2,600 2,462 $200 2,400 2,200 2,000 1,800 1,600 1,400 1,200 $189 $177 $176 $167 $166 $164 1,462 1,327 1,150 $142 1,652 1,629 1,567 1,581 1,367 1,271 1,414 $142 1,462 $145 2,224 2,081 2,033 $137 $134 $131 $128 $141 $190 $180 $170 $160 $156 $150 $140 $130 1,000 Jan-14 Feb-14 Nov-14 Dec-14 Feb-15 Mar-15 May-15 Sep-15 Oct-15 May-16 June-16 Aug-16 Sep-16 Jan-17 Feb-17 $120 /bag (LH scale) $/tonne (RH scale) Price remains well below highest level in US$ 9

Focus on Q4 EBITDA/tonne 25,000 24,167 5,000 20,000 4,500 15,000 14,183 14,118 12,407 4,000 10,000 3,500 5,000 3,000 - Q1 Q2 Q3 Q4 2,500 EBITDA per tonne ( ) Volume (kt) EBITDA rose in Q4 after price increase of 600/bag, or 12,000/tonne and improvement in fuel mix Indication of strong improvement in profitability for 2017 even if volumes are same or lower than 2016 Better fuel mix Additional price adjustment of + 150/bag at start of Q1 and 250 in February, inc VAT 10

Nigeria cash cost analysis % of average cash costs per tonne (Nigeria, 2016) Plant general 6% SG&A 12% O&M contract 4% Direct wages 6% Kiln fuel (cement plant) 36% Maintenance 5% Other variable 3% Refractories 1% Gypsum 4% Packaging 9% Mine costs 2% Limestone 0.4% Power Plant 12% Approximately 55%-60% of cash costs are US$ based 11

Better fuel mix Kiln fuel is the major cost of cement production Group margins are affected by mix of fuel in Nigerian kilns Preference has previously been to run on gas, but: Disruption and maintenance have lead to shortages since 2014, thus affecting margins Disruption was significant in 2016; attacks on oil pipelines also affect gas distribution Back-up LPFO often not available locally, forcing production shutdowns prior to use of coal (especially 2014) Gas priced in US$ but paid in Naira, so is affected by FX Relative cost of alternative fuels vs gas per tonne of clinker +46% Obajana Ibese Own-mined coal 0.7x 0.7x +47% Locally bought coal 0.8x 0.8x Imported coal 1.2x 0.9x Gas 1.0x 1.0x LPFO 2.5x 1.8x Obajana & Ibese fuel mix 100% 80% 60% 40% 20% 0% 5% 32% 22% 63% 55% 23% 29% 30% 33% 27% 38% 43% 48% 48% 45% 28% 23% 43% 40% 31% 45% 9% 15% 23% 5% 0% 0% 0% 19% 24% 61% 50% 72% 81% 39% 22% 35% 49% 43% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Gas Coal LPFO 12

Coal programme delivered All Nigerian kilns now able to run on coal LPFO use eliminated since Q4 2016 with positive impact on margins Dangote Industries supplying coal from mines in Kogi from March Switch to own-mined coal has several benefits +46% +47% Cheaper and more reliable than gas, thus improving margins Eliminates need for expensive LPFO as back-up Reduces FX need for imported fuel Ibese Obajana Mines Gboko Could potentially run all lines 100% on local coal at lower cost than gas DCP committed to disclosing CO2 emissions in line with good practice and potential NSE requirements 13

Pan-Africa gaining momentum Strong performance despite economic downturn across much of Africa Sales volumes up 54.0% to 8.6Mt (excl. eliminations) Revenues up 88.5% to 195.0B EBITDA up 5.5% to 26.5B Start-up and diesel costs in Tanzania weighed on margins Gaining/consolidating market shares across Africa Local disruptions in Ethiopia, Tanzania But proves benefits of diversified production/revenue base Sierra Leone and Congo expected to begin sales in Q1 2017 Year ended 31 st December Rest of Africa performance 2016 2015 Change Volumes sold (kt) 8,639 5,609 54.0% Revenue ( B) 195.0 103.5 88.5% EBITDA* ( B) 26.5 25.1 5.5% EBITDA margin 13.6% 24.2% * Excluding corporate costs and eliminations (see note 46to accounts) Cement sales ('000 tonnes) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2015 2016 14

Country updates Cameroon Nearly 1.1Mt sold in 2016 Market share 43% Ban on imported cement is opportunity for our clinker grinding plant to increase sales GDP increased by 5.6%, with slightly higher growth forecast for 2017 Inflation falling and currency appreciating against US$ Average cement pricing of $103 in 2016 Ghana 1.1Mt cement sold, up 73.9%; 23% share in December Pricing averaged at $115 during the year Importing from Nigeria provides non-duty alternative to imports from outside ECOWAS Planning a 1.5Mta clinker grinding facility to import clinker to manufacture cement within Ghana Ethiopia Nearly 2.0Mt cement sold in 2016 Market share now 24% Cement prices fluctuated, averaging $90 and ending the year at $96, following the civil unrest and its impact on distribution to markets 400 trucks for distribution of cement into key markets Senegal Volumes up 9% to just over 1Mt 25% market share achieved Cement pricing relatively stable, averaging $76 across the year Government has approved $370m for investment in roads and power 15

Country updates South Africa Dangote Cement South Africa increased sales by 3.8% during the year Continued focus on an optimisation programme to improve logistics, sales and plant efficiency Economy remained muted with GDP growth of 0.4%, following Brexit But the government is increasing its commitment to infrastructure investment Tanzania Sold 0.6Mt cement in 2016 Lack of agreement on gas pricing meant use of expensive diesel gensets, but agreement now in place for gas supply, which will significantly reduce energy costs when we deploy temporary gas turbines for power Will begin construction of a coal/gas power station to provide electricity Zambia Dangote Cement increased sales to nearly 0.8Mt 40% market share Downturn in copper mining, lower export revenues, high inflation, high unemployment, power shortages and rising national debt Kwacha remains under pressure GDP achieved 2.9% growth in 2016 and is expected to recover to about 4% over the next few years Increasing middle-class demand for household goods, consumer electronics and higher-quality foods Cement prices averaged about $79/tonne during the year and ended 2016 at the same price 16

Update on trading and outlook for 2017 Sharp increase in Nigerian Q4 EBITDA/tonne will drive substantial margin gains in 2017, even if volumes are flat Additional price increase in January 2017 Own-mined coal now arriving at plants, further margin potential Mined by Dangote Industries, priced and paid in Naira Improves fuel security, reducing dependence on erratic gas supply Will enhance margins, as cheaper than gas, imported coal (at Obajana), LPFO New capacity expected Q1 2017 Sierra Leone (0.7Mta) already importing Congo (1.5Mta) expected March or April Gas agreement reached in Tanzania Will enable replacement of diesel gensets by gas turbines Work will begin on dual coal/gas power plant Gas also an option for kilns +46% +47% 17

Investor Relations For further information contact: Carl Franklin Head of Investor Relations Dangote Cement Plc +44 207 399 3070 +44-7713 634 834 carl.franklin@dangote.com Uvie Ibru Investor Relations Dangote Cement Plc +44 207 399 3070 Uvie.ibru@dangote.com www.dangotecement.com @DangoteCement 18