Cement firms rekindle hope in the economy 

by Dennis Okonne

The cement industry is leading the way in industrial expansion and creating much needed employment.  Over the past few years the economy has been growing at about 5% p.a, but the cement market has increased by 15%. This growth is not surprising given that the cement companies quoted on the Nigerian Stock Exchange have been proactive in terms of capacity expansion, making positive returns on investment (ROI) to their shareholders as well as making the country to be self sufficient in domestic cement production without recourse to  importation. The country installed production capacity is 36.75 million metric tons per annum.
The growing fortunes of the cement sector is attributed to beneficial government incentives, notably the backward integration policy (BIP), which initially limited cement importation to market players committed to developing their own domestic production capacity. Also, the ban on finished cement importation as well as aggressive infrastructure development around the country has ramped up the growth of the industry. The major players in this sector are Dangote cement Plc, Lafarge Wapco, Ashaka cement Plc and Cement Company of Northern Nigeria (member of the BUA group).
Nigerian cement industry consists of 4 key players. These are: Ashaka Cement, West African Portland Cement Company (Wapco), Dangote Cement Plc (owned by Dangote Group) and Cement Company of Northern Nigeria (CCNN). These companies are also the cement manufacturers quoted on the Nigerian Stock Exchange (NSE). Other cement companies (largely cement baggers) are Nigeria Cement Company Ltd, Atlas Cement Company, Bendel Cement, Allied Cement Company, Eastern Bulkcem Ltd, Ibeto Cement Company, Nigeria Spanish Cement Company and Flour Mills Nigeria Ltd.
Comparative analysis of the companies in the industry, that is, looking at their capacities, financial performance and return on investment in the last one year shows.
1. Dangote cement Plc: is the industry leader by market capitalisation. It is currently the highest priced stock in this sector (Building materials) and has the largest number of shares outstanding. Dangote Cement Plc is Nigeria’s largest producer with operations in 14 African countries. These new plants are now generating jobs and prosperity in those countries. In 2011, Nigeria was importing cement. In 2012, it became self sufficient in cement and the company that made it happen has started operating in other African countries. The company has therefore eliminated Nigeria’s dependence on imported cement and has transformed the nation into an exporter serving neighbouring countries.
It is a fully integrated quarry-to-customer producer with a production capacity of 29.25 million tonnes in Nigeria. Its Obajana plant in Kogi state, is the largest in Nigeria with 13.25 million tonnes capacity; Ibese plant in Ogun state has a production capacity of 12 million tonnes and Gboko plant in Benue state produces four million tonnes per annum..
In its audited result, its revenue rose from N386.177 billion in the preceding year to N391.639 billion, translating to an increase of +1.4%. Profit before tax slide marginally from N190.761 billion previously to N184.688 billion, a decrease of -3.2%. Similarly, its profit after tax also slumped by -20.7% from N201.198 billion to N159.501 billion. Consequently, a mouth-watering dividend of N6.00 per share was appropriated.
The icing on the cake is its second quarter 2015 result, with turnover leaping from N102.583 billion in the preceding year to N127.477 billion, an increase of +24.27%. Similarly, its profit after tax grew marginally from N52.090 billion previously to N53.188 billion, an increase of +2.11%.
Market Statistics:
Shares in issue     = 17,040,507,405
52 Weeks High     = N190.00
52 Weeks Low      = N141.90
52 Weeks Change = 34%
Last Price             = N181.00
P/E Ratio             = 16.27
EPS                     = 9.36014
Price/Book Value   = 4.84
Dividend              = 600 kobo per share
Dividend yield      = 1.52%
Bonus                  = no bonus
2. Lafarge Africa (Wapco) Plc: This foremost cement manufacturing and marketing company in Nigeria has re-opened a new vista in cement production. Lafarge WAPCO has three plants – one in Sagamu and two in Ewekoro with a current production capacity of 4.5 million metric tonnes.
The Company’s objective of increasing the availability of cement to Nigerians as well as assisting in achieving the Federal Government’s drive for affordable housing for all is their priority. It has made immense investments in supporting Nigeria’s socio-economic development.  Since its establishment in 1959, it has grown in a sustainable way and has made tremendous contributions to the availability of cement in the country. This puts the company at the forefront of exploration, production and marketing of cement in Nigeria.
With the take-over of Blue Circle Industries Plc, U.K in July 1 2001, Lafarge SA of France became the majority shareholder in WAPCO, leading to the change of name from West African Portland Cement Plc to Lafarge Cement WAPCO Nigeria PLC in February 2008.
In its audited result 2014, its turnover dipped from N206.072 billion in the preceding year to N205.844 billion, translating to a decrease -0.1%. Similarly, its profit after tax nose-dived from N60.953 billion previously to N36.660 billion, a decrease of -43.10%. Consequently, a final dividend N3.60 per share was proposed for sharing amongst its shareholders.
In its second quarter result 2015, its turnover grew from N55.356 billion in the preceding year to N116.709 billion, translating to an increase +110.83%. Similarly, its profit after tax leaps from N15.557 billion previously to N26.209 billion, an increase of +68.47%.
Market Statistics:
Shares in issue     = 3,001,600,004
52 Weeks High     = N104.50
52 Weeks Low      = N76.00
52 Weeks Change = 38%
Last Price             = N103.09
P/E Ratio             = 8.93
EPS                     = 11.54740
Price/Book Value   = 1.61
Dividend             = 360 kobo per share
Dividend yield      = 0%
Bonus                  = no bonus
3. Ashaka Cement Plc: The Company is a subsidiary of Lafarge SA and is involved in the manufacturing and marketing of cement products in Nigeria. The company’s operations are organized into three Divisions: Aggregates and Concrete, Cement and Gypsum. It is active within the construction/building materials sector of the Nigerian Stock Exchange.
Ashakacem Plc was incorporated on August 7, 1974 as a private limited liability company with primary activities as manufacturing and marketing of cement products. It was later converted to a public company and its shares were subsequently quoted on the Nigerian Stock Exchange (NSE) in July 1990. Ashaka was fully integrated into the Lafarge Group in July 2002 after the acquisition of Blue Circle Industry Plc of the United Kingdom (BCI, UK) by Lafarge SA, France. Lafarge Group remains the key shareholders in Ashaka with 50% ownership via BCI and 0.16% via Lafarge (Nigeria) limited. This puts the total shareholdings of Lafarge Group in the company at 50.16 per cent while the remaining percentage (49.84%) is held by Nigerians (private individuals and institutions).
In its audited result, its revenue slumped from N21.694 billion in the preceding year to N21.133 billion, translating to a decrease of -2.58%. However, its profit after tax quantum leaps by +92.64% from N2.616 billion to N5.040 billion. Consequently, a dividend of 45 kobo per share was appropriated from 42 kobo per share last year, an increase of +7.14%.
The second quarter 2015 result saw turnover dipping from N12.329 billion in the preceding year to N10.743 billion, a decrease of -12.86%. However, its profit after tax rose from N3.518 billion previously to N3.550 billion, an increase of +0.93%.
Market Statistics:
Shares in issue     = 2,239,453,125
52 Weeks High     = N34.70
52 Weeks Low      = N17.22
52 Weeks Change = 50.37%
Last Price             = N23.00
P/E Ratio             = 11.28
EPS                     = 2.03919
Price/Book Value   = 1.00
Dividend              = 45 kobo per share
Dividend yield      = 0.45%
Bonus                  = no bonus
4. Cement Company of Northern Nigeria plc: It was founded by the Premier of the then Northern Region, Alhaji Sir Ahmadu Bello, Sardauna of Sokoto. It was incorporated in 1962 and commenced production in 1967 with an initial installed capacity of 100,000 tons per annum at the Kalambaina plant. In 2000 therefore, public bidding for the company was concluded and Scancem International ANS of Norway, a member of Heidelberg Cement Group was appointed as core investor and technical partner of the company. Following a strategic re-orientation, Heidelberg Cement Group divested its CCNN shares in 2008. The Nigerian company Damnaz Cement Company Limited became CCNN’s new core investor. In 2010, BUA International Limited acquired Damnaz Cement Company Limited and became indirectly the majority shareholder in CCNN and its technical partner.
The company is engaged in the production and marketing of cement under the brand name “Sokoto Cement”. Presently the company produces CEM II type of cement in accordance with the Nigerian Industrial Standards. Sokoto Cement is ideal for all construction purposes in Nigeria. Its unique quality makes it the cement of choice for block-making, plastering and concrete works.  Its high early strength, rapid setting and low heat of hydration are all distinct features that characterize our high quality production process.
In its audited result, its turnover dips marginally from N15.311 billion in the preceding year to N15.119 billion, translating to a decrease of -1.3%. However, its profit before tax leaps by +17.6% from N2.105 billion previously to N2.476 billion. Similarly, its profit after tax grows from N1.559 billion previously to N1.918 billion, an increase of +23.0%. Its Net Assets rose by +14.01% from N8.284 billion to N9.445 billion.  Consequently, a dividend of 35 kobo per share was appropriated.
In its second quarter 2015 result, its turnover dipped from N9.395 billion in the preceding year to N9.395 billion, a decrease of -6.98%. Similarly, its profit after tax slumped significantly from N1.588 billion previously to N1.303 billion, a decrease of -17.98%.