Dangote Cement Plc (DANGCEM) Q3 FY2025 Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Dangote Cement 9 Months 2025 Results Investor Call. [Operator Instructions] Please note that this call is being recorded. I would now like to hand the conference over to Temilade Aduroja. Please go ahead.

Good morning, everyone, on the call. Thanks for joining us today for Dangote Cement's 9 Months Investor Call. On the call today, we have the Group Managing Director, Mr. Arvind Pathak. We also have the CFO, Dr. Gbenga Fapohunda. Mr. Pathak will take us through the presentation, and then we'll have the Q&A after the call. So over to you, Mr. Pathak.

Thank you, Temi. Good afternoon, everyone. Thank you for taking the time to join us today. It's my pleasure to welcome you to this conference call to discuss Dangote Cement's financial results for the 9-month period ended September '25. Let me begin by highlighting some of the key milestones we have achieved so far this year. In October, we made remarkable progress in our expansion strategy. Through sustained dedication, commitment and hard work, we are in the process of stabilizing our grinding plant at Cote d'Ivoire this year, increasing our total installed capacity to 55 million tonnes across Africa. This achievement underscores our commitment to regional self-sufficiency and further consolidates our leadership position as the Africa's foremost cement producer. In addition to our expansion efforts, we have also made notable strides in cost optimization, export growth, profitability and sustainability, all of which will be discussed in detail as we proceed. On Page 3, we highlight the continued strength of our geographical footprint across Africa. Following the successful commissioning of our grinding plant in Ivory Coast, Dangote Cement now has an operational presence in 11 countries across the continent. Our expansion pipeline remains robust. The construction of our 6MTPA integrated Itori planta, a key project designed to support our export growth ambitions is progress according to plan. In addition, we are advancing our $400 million investment to double the capacity of our Ethiopian plant, reinforcing our commitment to meeting the growing demand for cement across Africa. On Page 4, we turn to the macroeconomic environment in Sub-Saharan Africa, where the cement market continues to demonstrate resilience despite prevailing global headwinds. According to IMF, GDP growth in Sub-Saharan Africa is projected to remain stable at 4.1% in 2025. Although this represents a moderate pace, growth is supported by stronger commodity prices, sustained infrastructure investment and a gradual recovery in intra-African trade. Furthermore, unlike in 2024, most Sub-Saharan African currencies have appreciated against the U.S. dollar, easing foreign exchange pressures and supporting regional business performances. On Page 5, we represent an overview of key domestic macroeconomic indicators. On a positive note, inflation continued to ease for the sixth consecutive month, declining to 18.02% in September '25. Also the naira, which had previously been among the worst depreciated currencies in the region, has shown encouraging signs of stabilization, appreciating from NGN 1,549 per dollar at the end of 2024 to $1,475.3 at the end of September '25. This improvement is largely attributed to increased foreign exchange inflows, supported by a series of fiscal and monetary policy reforms aimed at enhancing market confidence and liquidity. Moving on to Page 6. Let me take a moment to discuss some of our key strategic and operational initiatives that are positioning Dangote Cement for long-term sustainable value creation. One of our top priorities is expanding capacity to drive future growth. We have set an ambitious target to increase our total production capacity to 66.4 million tonnes per annum by 2030. supporting our long-term vision of making Africa self-sufficient in cement and clinker production. Turning to Page 9. We focus on our export strategy, which continues to play a vital role in our regional growth agenda. Dangote Cement has strengthened its export operations, aligned with our vision to promote regional self-sufficiency in cement production. Over the past 5 years, exports from Nigeria has grown at a compound annual rate of 34.6%. During the 9 months of 2025, exports from our Nigerian operations increased by 23%, reaching 1.1 million tonnes, reflecting improved efficiency and stronger export infrastructure. In West Africa, we export clinker from Nigeria to our dedicated terminals to Cameroon and Ghana, while cement is exported to Niger, currently paused and Togo complement our footprint in the region. Looking ahead, our ambition is to achieve 10 million tonnes of combined cement and clinker exports by 2030. The ongoing construction of our 6 million tonne per annum Itori plant in Ogun State will play a pivotal role in raising this target, supporting our broader mission to serve as a net exporter of cement across Africa. On Page 10, we have outlined our various cost efficiency initiatives, which are central to sustaining profitability and maintaining our competitive edge. We have made strong strides in logistics cost optimization through our CNG adoption program, fuel management, import substitution, ForEx utilization strategy and alternative fuel substitution. Dangote Cement now operates over 3,000 full CNG trucks and more than 1,000 dual-fuel trucks, with plans to fully transition to a CNG-powered fleet in Nigeria by 2026. We also expect to deploy 1,400 additional mono-fuel trucks between 2026 and 2027. These initiatives delivered tangible benefits. CNG trucks reduced fuel costs by over 60%, while dual-fuel trucks achieved savings of around 25%. By substituting high-cost fuels such as gas, AGO, LPFO with cheaper cleaner alternatives, we continue to achieve substantial cost savings. Beyond cost reductions, these initiatives strengthened our position as the least cost producer, enhanced operational flexibility and embedded a culture of cost discipline and motivation across the business. I am proud to note that Dangote Cement is a first mover in the large-scale fuel metrics innovation within our industry, pioneering the development of CNG technology to improve efficiency and reduce environmental impact. In parallel, our FX utilization strategy, we've also transformed our foreign exchange position. Historically, we faced a monthly FX shortfall of about $20 million. But today, we have turned that into a surplus of over $1 million per month with further growth expected. We continue to expand this footprint by deploying over 6,000 trade containers and empowering customers through our innovative customer truck empowerment scheme. Under this scheme, we have supported customers with more than 4,000 trucks, providing them the opportunity to ultimately own their own vehicles. We are pioneering win-win model that enhance customer loyalty, improves logistic efficiency and strengthens long-term partnerships. Our customer base is broad and well diversified. Over 90% of our sales come through retail customers and no single customer accounts for more than 5% of our total volume. This diversification significantly mitigates commercial risk and ensures resilience among changing market conditions. We are also harnessing the power of technology and digital transformation across our operations. Advanced tools such as our distribution management system, electronic proof of delivery, business computing and information management, AI-driven analytics and other intelligence system are enabling smarter decision making, better operational efficiencies and enhance customer experience across the value chain. On Page 12, we underscore our unwavering commitment to delivering consistent value to shareholders remains at the core of our long-term strategy. Over the past 14 years, Dangote Cement's has maintained a strong track record of growth and value creation, supported by disciplined execution, [indiscernible] and resilient business model. [Technical Difficulty] Okay. Thank you. And sorry for the disruption. Continuing from where I left, between 2023 and 2024, we delivered another year of robust performance with revenue rising by 62%, EBITDA increasing by 56% and profit after tax growing by 10%. In addition, cash flow from operations before tax and working capital changes was up by 49% year-on-year, reflecting the strength of our underlying earnings and cash generation capability. These results clearly demonstrate the resilience and sustainability of our business model as we continue to execute our strategy with focus, discipline and unwavering commitment to catering enduring value to our shareholders. On Page 13, we provide an overview of our financial and operational performance for the 9-month period ended September '25. From a financial perspective, the group delivered another period of robust growth. Revenue increased by 23.2% to NGN 3,154.8 billion, driven largely by a strong performance in Nigeria, where revenue rose by 42.4%. Profitability also improved significantly, with group EBITDA up 57.2% to NGN 1,428.2 billion, while the EBITDA margin expanded to 45.3%. This strong performance reflects the success of our cost management initiatives, particularly in Nigeria, where EBITDA margins improved from 45.5% to 59.2%. As a result, profit margin after tax grew by an impressive 166.3% year-on-year to NGN 743.3 billion, exceeding our full-year profit by more than 47%. On the operational front, the group volumes declined modestly by 2.1% to 20.3 million tonnes, reflecting softer demand and persistent inflationary pressures in key markets. Despite these headwinds, we achieved notable progress in strengthening our export operations. Export volumes increased by 23%, supported by 27 clinker shipments to Ghana and Cameroon during the period. These developments highlight our continued commitment to expanding intra-African trade and reinforcing Dangote Cement leadership as a pan-African cement producer. We also made substantial progress on our sustainability agenda. During the period, we extended the use of alternative fuels, waste heat recovery capacity and advanced towards our medium-term decarbonization goals. A key achievement was the phased delivery of 1,600 additional CNG trucks, augmenting our existing fleet of 1,500 vehicles and supporting our transition to cleaner energy sources. Further, we implemented 11 alternative fleet systems across our plants to optimize energy efficiency and increase the utilization of alternative fuels. Our sustainability progress have been recognized externally. Dangote Cement recently received an upgraded B rating from the CDP in both water and climate categories, an important validation of our commitment to environmental stewardship, operational excellence and sustainable growth. Page 15 provides a comprehensive overview of our performance during the period. The group's income statement reflects strong results across both top and bottom lines. Earnings per share rose by 164.8%, reaching NGN 43.8, underscoring the group's solid profitability and efficient capital management. Page 16, our robust balance sheet position. As of September 30, 2025, our gross cash balance stood at NGN 364 billion, while net assets closed at NGN 2,435.9 billion, reflecting the continued strength of our financial foundation. On Page 17, we present an analysis of our cash inflows and how we have prudently allocated capital to deliver sustainable value for all our stakeholders. For the 9-month period of 2025, we generated NGN 1,291.1 billion in net cash flow from operations. Of this, NGN 461.8 billion was invested in capital expenditures to support our ongoing expansion and operational efficiency initiatives. Importantly, we made significant progress in deleveraging, reducing our net debt by NGN 1,104.1 billion compared to financial year 2024. bringing total net debt to NGN 957.8 billion as of September 30, 2025. Page 18 provides further insight into Nigeria operations, which remains the cornerstone of our business. Sales volume in Nigeria recorded modest growth of 0.4% to 13.2 million tonnes, while revenue increased by 42.4%. EBITDA for Nigeria operations grew by 85% to NGN 1,291 billion, with margin expanding to 59.2%, driven by successful implementation of exports, cost optimization, energy initiatives and CNG rollout. Page 19 provides further insight into the performance of our pan-African operations. Sales volume declined by 5% to 7.9 million tonnes, primarily due to weaker demand in key markets, notably Senegal and South Africa, which were impacted by post-election uncertainties as well as liquidity challenges in Ethiopia. As a result of this volume decline, the revenues dropped to NGN 1,056.6 billion and EBITDA decreased by NGN 201.1 billion. Looking ahead from Page 20 to 22, you will find updates on our pan-African operations. Notably, Tanzania, Zambia and Congo, all experienced volume growth, while other markets saw softer demand. Turning to Page 23. We provide an overview of our debt and liquidity position, including a time line for our key initiatives in the debt markets, particularly highlighting our bond and commercial paper instruments. At the end of April, we repaid our maiden 5-year NGN 100 billion bond, which was issued in 2020. In June, Moody's upgraded Dangote Cement's rating to B3 with a stable outlook, reflecting the strong fundamentals of our business and our ability to meet short-term funding obligations. On Page 20 to 28, we reaffirm our strong commitment to sustainability and corporate governance guided by the 7 pillars of the Dangote Way. A key highlight of this section is the introduction of the Dangote Cement decarbonization road map, which we have set an ambitious target of 20% reduction of CO2 emission across our operations by 2030. Sustainability remains central to our corporate strategy and we are proud that CDB rating was recently upgraded to B reflecting the tangible progress we are making in the environmental stewardship. Our group-wide alternative fuel substitution increased with exceptional performance in South Africa 40%, in Senegal 38%. In addition, we have deepened our social investment initiatives spending NGN 13.2 billion on CSR activity in 2024 and already spent over NGN 18 billion in the 9 months of 2025. We firmly believe that our long-term success is inseparable from the prosperity and well-being of the communities in which we operate. Further, we underscore our unwavering dedication to strong corporate governance. In July, our President and Chairman, Alhaji Aliko Dangote, GCON, stepped down from the Board in favor of an Independent Director. We have also undertaken a comprehensive review and adoption of the new governance policies, ensuring alignment with global best practices and reinforcing the integrity and transparency of our corporate framework. Before I conclude, I would like to extend my sincere appreciation to everyone who has joined us today; to our investors, your continued trust and support are a driving force behind our pursuit to excellence. While the 9 months of 2025 have presented challenges, our strong financial and operational performance demonstrates the resilience, adaptability and enduring strength of our business. With our ongoing strategic investments focused on enhancing efficiency and sustainability, I'm confident that Dangote Cement is well positioned to meet the future demand and sustain its growth momentum in the coming months. Thank you very much.

Thank you. Over to you for Q&A.

[Operator Instructions] It seems we have no questions on the conference call at this time and I would like to hand over to questions on the webcast.

The first question on the webcast is from Nnamdi from AfricInvest. Congrats on an impressive 9 months performance. First question is in management's view, how soon is SSA volumes likely to turn the corner? We observed significant gap in Nigeria's versus SSA EBITDA margin in Q3, overall drop in SSA margin which is Pan-Africa I recall in 2025 versus 2024. What is the strategy to manage this? I'll hand over to the GMD to answer that question.

Okay. Coming to the volumes in the SSA, it has been a mixed bag. As I said, there are certain countries which have done well or maybe they are flat. Unfortunately, it happened all at onetime in some of our key markets; that is to say Cameroon, Ethiopia to a certain extent in the beginning part of the year, Senegal and RSA. The good news is that RSA has improved, is going back to better than what we were doing last year; Ethiopia volume is back where we used to be; Cameroon and Senegal still there is a slight struggle, but in Senegal we have got measures in place to increase our export. Herein, I would like to mention whatever we adopt in Nigeria, we present as a case to the audience and our stakeholders. But the same template is followed by all our countries. Now coming to the profitability difference. See, this is the advantage of having a footprint across multiple countries. If you recall, there was a time in '23, '24 where SSA was giving us a lot of cover up for whatever setbacks we were having in Nigeria. Now it could be a reverse. So cement is a cyclical phenomenon and except for the call-outs that we have made and we can assure you that a significant cost difference have been made in SSA over the last 9 months. Some of it have already started fructifying. You might have seen the alternative fuels, I just mentioned a few of them. But if you look at Zambia, we are at 32%; in Senegal, we are 32%; so on and so forth. So we have done a very serious step. Some of these numbers will start reflecting in the early part of '26. So I don't see much worrisome. Yes, your observations are perfectly right.

Thank you. The next question is from [indiscernible] and he has a few questions here so I'll just quickly through. What is the time line for completion of commissioning of the 3 plants; Itori, Ethiopia and the expansion in Cote d'Ivoire? Increase in CapEx with almost NGN 300 billion in Q3 alone after making about NGN 166 billion in previous 2 quarters combined. What is the outlook for CapEx in the final quarter and what was the significant CapEx in the third quarter? What caused the decline in investments in associates from NGN 3 billion to about NGN 728 million in the 9 months? What is the outlook for the business in 2026 and in the medium term? And what is the outlook for debt profile in the short to medium term?

Can I take up the expansion project? Thank you for this question. As far as the Itori is concerned, maybe you might have missed out. In our previous investors call, we had said that we are -- at this stage, we feel that it should be possible for us to commission the Itori project by the end of the 2026. Ivory Coast, we already have commissioned one line and as I said, we are in the process of stabilizing it and while we do so, the second line is almost completed. Once we are out of stabilization and taking care of all the punch points, et cetera, we will go towards the completion of Line 2. If all goes well, it could be either end of the year or the first quarter of next year. Now Mugher, we have still not done the groundbreaking so the last minute commercial and other things have been finalized. And post that in our subsequent calls, I think we'll give you a fair idea about when we expect the Mugher plant to be operational. Financially, Mr. Gbenga will give you further details on financial numbers.

Yes. Concerning the question around the loan repayment, yes, the loan was repaid in July and we expect to maintain the same current debt level going forward. The second question around the reduction in investments in associates was largely driven by dividend that was paid by our associate company, Omybolo. Okay? The next one is increase in CapEx in the third quarter was largely driven by a couple of investments. CNG trucks, which the GMD spoke about, hundreds of millions of dollars was invested in that. We have alternative fuel we spoke about as well and also our investment in Cote d'Ivoire as well. Those were the main 3 items that increased the CapEx.

Coming to the last part of it regarding 2026. I would say I'm very optimistic about 2026 for the Dangote Cement. One is I see macroeconomic showing a lot of resilience and stability. Most of the currencies, as I said in my introduction, have appreciated compared to USD and major market being Nigeria and we see no reasons why we should be going back to the old dollar regime sort of fluctuations. And some of the major initiatives, if you look at it, which is could be CNG, could be export, could be growth; they are still to give a lot of potential that we have in those savings. Just to give you an example. In this year, we have progressively just added 1,500 plus some 600, 2,000 CNG trucks. So average for a year will come to around 1,000 trucks. Just imagine the numbers when the entire fleet of our trucks become CNG operated for the year 2026 so on and so forth. Export has just made a beginning and I said our vision is to take it to 10 million tonnes by 2030. For '26, we definitely aspire for somewhere around 4 million tonnes or plus 4 million tonnes. Our VFX, which used to be $20 million every month we used to spend, now we are plus positive and we expect in Q4 that this number to multiply. So all around and some of the countries which I called out from Pan-Africa, the positive signs are Congo is doing well; Zambia, which was struggling earlier is doing well. Some additional will come from Ivory Coast. Most of the places, Ghana is doing well. Where we have some of these challenges as cited, the volume has stabilized. Now the next step would be how to take it to the next level of converting into a higher EBITDA level performance. So I'm very hopeful about it. That is the guidance I can give for Dangote Cement in 2026.

So I'll just take 2 questions at once. Our next question is from [ Jennifer Oudu ] from Trust Asset Management. Could you provide context of price across the SSA operation? I believe that's in our presentation and Mr. Pathak has answered the question of the outlook. So from Absa, we have Adedayo Ayeni. Can you speak on the Nigerian cement market? Excluding exports, your volume is lower in third quarter. What is the driver? Also can you talk about the Botswana expansion, rationale for this and is there still exploratory and if not, what is the CapEx breakdown?

Okay. So let me just repeat what I said a while ago. Whatever template we incubate at Nigeria is also translated to all our operations and one of them is less export. So every country is on lookout because we have capacity, which can be sold in the other markets. So going to Botswana is because of some challenges that we are facing in South Africa market and this is 1 way of increasing the capacity utilization. So Botswana is -- from that point of view, Botswana country border is located very close to our plant and logistically, it makes sense for us to take the cement there. We also see some logistic advantage going forward. There is a fly ash availability and we can avoid the fly ash transportation from South Africa. So it is a continuous effort of all our countries to see how do we improve our capacity utilization in the various parts of the operations.

Next question from [ Joshua Taret from EMIM ]. Impressive results. Nigeria EBITDA margin rose sharply to 59.2% despite relatively flat volumes. How sustainable is this profitability level based on dynamics from reduction in energy costs, inflation trends and profitability and pricing? Second question is given the Pan-Africa EBITDA fell to 19% due to political and liquidity challenges, how does Dangote Cement plan to stabilize performance across that region and sustain cost leadership?

See, I think Pan-Africa I've answered it through multiple questions earlier and there's nothing more that I want to add on to that. See, Nigeria, as I said, is very, very sustainable because of all-round impact. See, when we started our reinforcing export strategy, we basically as the first step only were replacing our internal procurements, which was at Cameroon and Ghana clinker. But as the time has progressed, I think we have enlarged our reach to much larger. We have opened up a road corridor which starts from Nigeria ends at Ghana. And all the markets on route, whether it's Benin, Togo, Ghana itself; we have not only opened the clinker market, we also are getting very substantial orders for cement also. And that gives us the confidence that the 6 million tonne capacity that we are planning in Itori will -- in no time, we will feel the insufficiency of the capacity. So what you see in numbers is the cumulative of this Pan-African dollar outlet and the benefits that we get. Cost efficiency, we have talked about logistics we have made into that. In alternative fuels, the saving that we have. Usage of least cost fuel in our operations and so on and so forth, I can go on a number of initiatives that we have undertaken. So we are very confident in management to see that this is sustainable and if not improve, at least surely for sure, it will be sustainable.

From Samuel Ojerinde from Cordros. The company recorded an FX loss of about NGN 47 billion in the third quarter. Can you please provide more details on key drivers behind this loss? Is this solely due to depreciation of the Ethiopia currency? And I think this question has been answered. The second part of the question has been answered.

Okay. Yes, there was an FX loss taken in the Nigerian business. This is mainly due to the fact that the Nigerian business invested about $2 billion outside of Nigeria. So when the Nigerian naira currency actually appreciated, it gave a loss to the company. But from a group perspective is in and out, but it gave a loss to the Nigerian company for the quarter. And the other question that was asked around sustainability of EBITDA margin. We think the EBITDA margins are sustainable and from a forecast perspective, between 50% to 55% is good. This is largely going to be driven by our cost initiatives. The GMD has spoken about our CNG initiatives, which would give about 70% reduction in fuel cost versus AGO. He has also spoken about the usage of coal, which gives about 70% to 80% reduction in cost versus gas and other sources of energy, which are more expensive. Also, he spoke about our import substitution. In the last 2 years we have not imported coal. We have mined them locally saving us about 70% to 80% as well on that level.

I just got through 2 questions. One from Ilham, M&G Investments. I have seen some news articles around potential expansion in Zimbabwe and Botswana, which isn't mentioned here. Is this part of the CapEx expansion plan? And second question from [indiscernible]. Considering 2026 is the election year, how should we expect this to shape the performance for the next year?

Okay. See, Zimbabwe and Botswana will not be the only exception. As a management, we keep on looking for any opportunity in Africa and we always keep on exploring. And I think it is understandable when we explore, go into details, look into what business case does it make, how does it synergize with our operations. There is a time gap in which when we go through the exercise, the final decision is taken. So no sooner the final decision is taken, we come back and inform our stakeholders. But as of now, most of these things are exploratory. Botswana, I have already explained. We have got an approval from the Board and we are in the process of implementing this procedure. Now coming to the pre-election, we don't see that is a much change because the fundamentals seems to be not pointing in that direction that there would be anything significant change from where we are. On the contrary, we expect that there could be sometimes when the election year, the development jobs picks up the pace and that could be bringing some buoyancy in the cement market. So if at all, we see as a management would be some positive signs in the coming year.

We have no more questions on the webcast.

Thank you. We have no questions on the conference call either.

Okay. So I'll just hand back to the GMD to give closing remarks.

Okay. Thank you very much. I think it was a quite entertaining session we had with you in which we tried to give you an insight of our strategy and kind of what we are thinking, some sort of what we see looking forward. Having said that, maybe this is the last time in this year we are having this call. So on behalf of the management team, please accept our Seasons Greetings and Happy New Year to all our stakeholders. Thank you very much.

Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.