DANGOTE Cement Plc, Africa’s biggest producer of the building material, said first-half profit rose 28% as the benefits of expansion helped make up for “uncertainties” in its home market of Nigeria.
Net income was 121.8 billion naira ($614 million) in the six months through June, compared with 95.4 billion naira in the same period a year earlier, the Lagos-based company said in an e-mailed statement.
Sales gained 16% to 242 billion naira. The company has 40 million metric tons of installed capacity across three cement plants in Nigeria, an import terminal in Ghana and factories that have recently opened in Ethiopia, Zambia, South Africa, Senegal and Cameroon, it said.
The share of cement sales outside Nigeria has increased from 8% of the company total last year to 22% in the first six months of this year, culminating in 33% during June, Chief Executive Officer Onne Van Der Weijde said on a conference call on Friday.
“The African expansion is now taking place very rapidly,” Van Der Weijde said. “From basically a pure Nigerian operation we are all of a sudden a Pan-African operation.”
Dangote Group Chairman Aliko Dangote, Africa’s richest man, said in June that the cement unit is investing in 16 countries on the continent to tap demand for building materials as governments invest in infrastructure.
The company is spending billions of dollars for expansion across the continent, it said in the statement.
The company expects to start production at a plant in Tanzania in September, followed by one in Democratic Republic of Congo (DRC) in 2016, according to a slide presentation posted on Dangote’s website.
A new plant in Kenya may start up late in 2017, Van Der Weijde said. The company is still targeting sales volumes of 18 million to 19 million tons this year, despite challenges in Nigeria, he said.
In its home market, Dangote has grappled this year with fuel shortages that hurt demand, as well as a decline in market share after the company raised prices to protect its profit margins amid a devaluing local currency.
Nigeria, Africa’s biggest crude producer, has been hobbled by a halving of oil prices in the past year and the toll of an Islamist insurgency in the country’s north.
The economy is expected to grow 4.8% this year, down from 6.3% in 2014, according to the International Monetary Fund. Dangote shares rose 0.3% to 171 naira at the close of trading in Lagos.