Africa’s Richest Man Got Richer Last Year—But His Business Is Bleeding Dangerously
Last year, Dangote added USD 4.3 Bn to his net worth to occupy a new rank as the 9th richest man in the world. But in a matter of two months after this golden achievement, Dangote Cement is a fix it’s never felt before.
The business, which has presence in 9 other African countries, saw its exports volumes fall by almost 50 percent in 2019.
The financial results released by the cement giant reported Nigerian revenues of NGN 610.2 Bn in 2019 compared to NGN 618.3 Bn in 2018, representing a 41 percent dip.
Profit before tax stood at NGN 250.479 Bn from NGN 300.806 Bn posted in 2018, accounting for a drop of 16.73 percent. Revenue was NGN 891.674 Bn as against NGN 901.213 Bn in 2018.
The export volumes fell drastically as a result of Nigeria’s border closure to its West African neighbors. The closure which was meant to curb the smuggling of goods and generate revenue is now telling on Africa’s leading cement producer.
Cement exports dropped to 0.5 million tonnes in 2019 from 0.7 million tonnes in the previous two years. The company has exported to West African and Central Africa from Nigeria.
Though total production volumes for 2019 stood at 14.1 million tonnes, higher discounts, marketing and haulage coasts pushed core profits down by 9.1 percent and slid margins by 59. 2 percent.
Aliko Dangote himself expected to export 8 million tonnes of cement in 2019, but it’s apparent the intention to boost sales and generate hard currency fell through.
But all may not be in the mud for the company as it remains bullish despite having a “challenging” 2019. The board has proposed a final dividend of N16 per share subject to ratification by the shareholders at the coming Annual General Meeting.
Group Chief Executive Officer, Dangote Cement, Joe Makoju – who is now leaving the company – said, “Dangote Cement maintained strong financial performance despite a low growth environment, pricing pressure and increasing competition in key markets.
The Nigerian operations maintained volume and revenue performance in a challenging environment. Export sales were affected by the border closure in the second half of 2019. Looking ahead, I expect an increase in volumes in 2020 as we commence clinker exports via shipping from Nigeria”.
Nevertheless, Aliko Dangote remains the richest man in Africa. His venture ambitions remain on the positive side as his mammoth refinery in the outskirts of Lagos records significant progress.
With the border closure hampering many businesses outside the gargantuan Dangote Cement, the recent ease of doing business ranking achievement in Nigeria appears yet again to be only on paper.