N300bn bond issuance programme: Dangote Cement mulls over debt funding options
By Kayode Tokede
Dangote Cement Plc on Thursday said it contemplated debt funding options under planned N300billion bond issuance programme.
The company in a statement signed by its Deputy Company Secretary, Edward Imoedemhe to the Nigerian Stock Exchange (NSE) stated that it has obtained approval from its Board of Directors to access the capital market to support business growth and maximize available sources of its debt funding.
Dangote Cement Plc. is Nigeria’s largest listed entity by market capitalization on the NSE, as well as Sub-Saharan Africa’s leading cement producer, with a combined installed capacity of 48.6Mta across its operations in 10 African countries.
According to his statement, “The Company has submitted an application to the Securities and Exchange Commission (SEC) for the registration of a bond issuance programme.
“Subsequent to obtaining regulatory approvals, the Company intends to explore its medium to long-term debt funding options through the debt capital market, subject to favorable market conditions.
“When raised, the proposed funding will be used for capital expenditure of the Company’s expansion projects, short term debt refinancing, and working capital requirements.”
The Cement manufacturing Company remained a major contributor to the economy with a tax charge of N97 billion for the financial year ended December 31, 2020, even as it proposed a dividend of N16 per share.
Revenues for the Nigerian operations increased by 18 per cent to N720 billion, owing to demand in the domestic market. This volume growth was enhanced by a successful innovative national consumer promotion “Bag of Goodies – Season 2” and lower rains in the third quarter compared to the previous year.
The Nigerian business recorded a strong Earnings before interest, taxes, depreciation and amortization (EBITDA) of N421.4 indicating a margin of 59per cent.
Dangote Cement posted a record high Pan-African EBITDA of N71.3 billion, which went up by 49.0 per cent. Within the period under review, the cement group commissioned its gas power plant in Tanzania. Group earnings per share was up by 36.9 per cent to N16.14.
Dangote Cement recorded strong performance not only at the top line but also at the bottom line, owing to cost saving measures. Despite inflationary pressures and foreign exchange volatility, disciplined cost control measures enabled the company to maintain a relatively flat cash cost per tonne. The cost control measures include improved plant efficiency, better fuel mix and general overhead optimization.
Chief Executive Officer, Dangote Cement Plc, Michel Puchercos had said “Several firsts made 2020 a productive year such as our maiden clinker shipment, maiden bond issuance and successful buyback programme.”
Dangote Cement is sub-Saharan Africa’s largest cement producer with an installed capacity of 45.6Mta across 10 African countries and operates a fully integrated “quarry-to-customer” business with activities covering manufacturing, sales and distribution of cement.
Dangote Cement has a long-term credit rating of AA+ by GCR and Aa2.ng by Moody’s due to its market leading position, significant operational scale and strong financial profile evidenced by the company’s robust operating and net profit margins relative to regional and global peers, adequate working capital, satisfactory cash flow and low leverage.
Dangote Cement is a subsidiary of Dangote Industries Limited, a diversified and fully integrated conglomerate as well as a leading brand across Africa in businesses such as cement, sugar, salt, beverages, and real estate, with new multi-billion dollar projects underway in the oil and gas, petrochemical, fertiliser and agricultural sectors.
