DANGOTE CEMENT HIT BY NAIRA AND RESTRATEGISES

Africa's largest Cement manufacturer. Dangote Cement PLC has been forced by imported and local cost push inflation to increase ex factory price by N600 and re-strategise on its energy supply.

According to a release from management, Nigeria remains the African groups main market and sales volume continued to be robust in July and August.

There has been some major challenges, though. These are disruption in gas supply in recent months; the continued depreciation of the Naira against the dollar and higher price for present alternatives to gas for powering its factories.

The gas supply drop led Dangote Cement to resort to use of coal and LDFO which cost three times more.

In addition, the drop in the value of the Naira also shot up cost of imported coal and other essentials

Unable to absorb these pressures, Dangote  cement decided to renege on its promise given last September not to increase prices. Thus the N600 added brought the price to slightly higher than September levels.

However, these pressures have forced the company to review its energy supply chain and decided not only to depend more on coal, to also integrate backwards from November to mine its own coal.

Thus installation of coal mills have been accelerated and it is hoped that own mined coal will be cheaper than gas because gas is valued in dollars and paid for in Naira as if it is an imported product.

Says CEO one van der Weijde:
"These are challenging times for Nigeria and for Dangote cement but we are taking strong actions that will position the company for continuing growth".

Meanwhile, once these teething challenges were tackled it is hoped that the company will reap full benefits from its investment in cement production in various other African countries.

Of course, this is the kind of ultimate benefit that will flow from today's trying times if only government can come up with incentives to help manufacturers who can not absorb the immediate blows especially from the Naira depreciation, to stay and innovate.

Only very few companies have the kind of resources at Dangote cement disposal yet Nigeria can not afford their looking elsewhere in these times.

For example, must Nigerian gas be priced and sold to Nigerian manufacturers in dollars?

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