Nigeria’s biggest company by market capitalization, Dangote Cement (DANGCEM.LG), expects to double its cement production capacity across Africa this year to 40 million metric tons ( 44.092 million tons), its chief executive said on Monday.
Devakumar Edwin told the Reuters Africa Investment Summit in the commercial hub of Lagos that the firm would add 9 million tons to its Nigeria operations, bringing them to 29 million tons, and open plants across Africa that have been several years in the making, adding a further 11 million tons.
Dangote Cement, owned by Africa’s richest man Aliko Dangote with a personal fortune of $25 billion, saw its 2013 profits increase by 40 percent to 190.76 billion naira ($1.16 billion), from 135.64 billion naira a year earlier.
“The key driver is the increase in volumes. We have kept a focus on controlling costs, but our focus on volume growth … has been what has increased our profits,” Edwin said.
Dangote has cement plants spanning Africa, from Senegal to South Africa, but most have been in construction phase and between them they contribute less than a million tons to the group’s current overall production capacity, Edwin said.
That would change this year, as plants in Senegal, Sierra Leone, Cameroon, Zambia, South Africa and Ethiopia come on tap.
“All of them will come into operation in the current year,” Edwin said.
Additional capacity in Ivory Coast, Ghana, Liberia, Tanzania, Congo and in Nigeria would mean that by mid-2016 Dangote would have a 60 million ton capacity, he added.
Almost all of this expansion had been funded with internal cash flows, Edwin said, unlike rivals.
“Other cement majors borrowed heavily for mergers. One of the key reasons we have been able to grow aggressively in the African market is because they are cash strapped and we do not have that problem,” he said.
Dangote’s main rival in its home market is France’s Lafarge
(LAFP.PA).
Dangote has long said it intends to list in London, although a plan to do so last year has been put back. Analysts say corporate governance issues remain a hurdle. Edwin denied that.
He said the company had fulfilled a list of requirements, including appointing an independent board and carrying out appropriate financial reporting.
The reason it was taking time to list was that investors had not fully appreciated the value of Dangote’s non-producing assets outside Nigeria. “But that is changing,” Edwin said, adding the company hoped to list some time next year.
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($1 = 164 naira)
(Editing by Mark Potter)