Dangote Cement to slow capex next year as Africa expansion gains pace
By Chijioke Ohuocha
LAGOS (Reuters) – Dangote Cement, Nigeria's biggest listed company, expects to slow its capital spending next year to around $700 million, as it completes most of its African expansion projects, its chief executive said on Wednesday.
Edwin Devakumar said Africa's biggest cement operation budgeted to spend around $1.4 billion this year, as it ramps up its cement works from Senegal toZambia, the bulk of which are expected to begin production this year.
Dangote Cement, which is majority owned by billionaire tycoon Aliko Dangote, embarked on an expansion outside its home market to tap into infrastructure growth and has invested more than $5 billion in projects. It has projects inCameroon, Ethiopia, Kenya, Niger and Zambia.
"This year we may end up with a capex of close to $1.4 billion though we expect it to come down next year to around $700 million," Devakumar told Reuters, adding it was growing its direct deliveries to customers to gain market share.
Dangote Cement this week lowered cement prices in Nigeria by about 14 percent to 1,150 naira, in order to boost volumes after it said sales in Africa's biggest economy for nine months to September fell by 1 percent to 9.8 million tonnes and reported a 1.5 percent rise in pretax profit.
But the cut in cement prices has seen its share price shed 1.7 percent since Monday to hit a 14-month intraday low of 188.53 naira on Wednesday. The stock, which makes up a third of Nigeria's market capitalisation is down 4.6 percent this year.
Its $600 million cement plant in South Africa has started production, Devakumar said while it has started the process of commissioning its Senegal plant. Ethiopiawill start the commissioning process next month, he said.
Devakumar said a cement factory in Sierra Leone was scheduled to start this month but it has been put on hold due to ongoing Ebola crisis in the country, adding that the project would start when the crisis abates.
(Editing by Tim Cocks, editing by David Evans)