Dangote Cement Plc ($DANGCEM)

Good afternoon, ladies and gentlemen, and welcome to the Dangote Cement Plc Q1 2026 Investor Call. [Operator Instructions] Please note that this event is being recorded. It is now my pleasure to hand over the call to Michael Ani. Please go ahead, sir.

Thank you, Dennis. Good afternoon, good morning, good evening, depending on where you join us from. My name is Michael Ani, and I welcome you to the Dangote Cement Plc Q1 2026 Investor Call. As you know, Dangote Cement recently released its first quarter 2026 financial results. On this call, we have key management executives headed by the Group Managing Director in the person of Mr. Arvind Pathak, who will be leading this conversation to provide insight into these numbers. He will be supported by the Group Financial Controller in the person of Dr. Gbenga Fapohunda. Before I invite the GMD to have his opening remarks, I just want to say that our key management executives are on ground to take as much questions as possible. Please just ensure you are audible enough. GMD, you have the floor, sir.

Thank you, Michael. Good afternoon, everyone. Thank you for taking the time to join us today in this call. It's my pleasure to welcome you to this conference call to discuss Dangote Cement's Q1 2026 financial results. Dangote Cement Plc is Sub-Saharan Africa largest cement producer with operations in 11 countries spread across the continent, as highlighted on Page 2 of our presentation. Following the commissioning of our 3 MTPA grinding plant in Cote d'Ivoire in quarter 3 2025, our installed production capacity has increased to 55 Mta. We remain firmly on track to achieve our ambitious target of about 80 Mta by 2030, supported by a robust pipeline of ongoing expansion projects. On the capital markets front, we are the most capitalized industrial goods company on the Nigerian Exchange Group NGX, based on published data as at 28th April 2026. Moving on to Page #3. The IMF projected regional growth to moderate slightly from 4.5% in 2025 to 4.3% in 2026, reflecting a more challenging global environment, escalating geopolitical tensions, particularly in the Middle East, have disrupted supply chains and driven a sharp rise in oil prices, weighing on overall economic activity. On the same page, we also present a snapshot of key domestic macroeconomic indicators. In Nigeria, the macroeconomic environment in Q1 2026 was characterized by renewed inflationary pressures alongside policy easing. Inflation rose towards the end of the quarter to 15.38% driven mainly by higher petrol prices linked to global oil market disruptions following the Middle East conflict. The resulting increase in fuel costs pushed up transportation and logistics expenses, further weighing on household purchasing power. The Central Bank of Nigeria adopted a more accommodative stance, lowering interest rates to support liquidity and economic activity. Moving on to Pages 4 and 5, we present an overview of the group's financial and operational performance of Q1 2026. From a financial standpoint, the group delivered another strong set of results. Revenue grew by 20.4% to NGN 1,198 billion, driven by a robust contribution from both Nigeria and Pan-Africa, where revenues increased by 23.8% and 14.7%, respectively. Profitability also strengthened with group's EBITDA rising 22.8% to NGN 567.1 billion and EBITDA margin improving to 47.3%. This performance underscores the effectiveness of our cost management initiatives, particularly in Nigeria, where EBITDA margin expanded from 56.7% to 61%. Consequently, profit after tax grew by a strong 54% to NGN 321 billion. Operationally, group volume rebounded by 13.7% increase to 7.5 Mt, supported by improved sales across most of our markets despite prevailing headwinds. Export volumes from Nigeria increased significantly by 71.6% as we achieved 10 clinker shipments to Ghana and Cameroon during the period. In line with our ongoing focus on enhancing operational efficiency and reducing costs, we commissioned a mobile refueling unit at our Okpella plant and deployed 300 CNG trucks in Tanzania. On Page 6, we present a detailed overview of the group's financial position, cash flow performance and leverage metrics. In Q1 2026, the group generated strong net cash flow from operations of NGN 591.3 billion, while capital expenditure stood at NGN 48.9 billion, reflecting continued investment in expansion projects and operational efficiency initiatives. We also made significant progress in deleveraging, reducing our debt exposure by NGN 461.6 billion compared to FY 2025. As a result, total net debt declined to NGN 114.0 billion as at the end of March 2026, further strengthening our balance sheet and financial flexibility. Turning to Page 7. We provide a detailed overview of our debt profile and liquidity position, including a time line of our key activities in the debt capital markets, with particular emphasis on our bond issuances and commercial paper programs. We also highlight the strong credit ratings of Dangote Cement across multiple ratings agencies, reflecting the solid fundamentals of our business and our robust capacity to meet short-term funding obligations. A key highlight across Pages 8 to 11 is the introduction of Dangote Cement decarbonization road map which sets clear target to reduce Scope 1 and Scope 2 CO2 emissions by 20%, that is by 2030. Sustainability remains a core pillar of our strategy, reinforced by the retention of our B rating from CDP, reflecting our continued commitment to environmental stewardship. At the operational level, our group-wide alternative fuel substitution rate has reached 10% with standout performance in South Africa at 40% and Senegal at 38%. We have also significantly scaled up our social impact efforts with CSR spending rising to NGN 7.9 billion in quarter 1, 2026, more than 7x the level recorded in the previous year. This underscores our belief that long-term business success is closely tied to the well-being and development of our host communities. As I conclude, let me turn to the business outlook, which is covered in Page #13 and 14 of the presentation. Dangote Cement operates within the broader framework of the Dangote Group's Vision 2030, an ambitious plan to achieve $100 billion in revenue by the end of the decade and position the group among the world's top 100 companies. This vision spans key sectors, including cement, energy, petrochemicals, fertilizer and agro-industries, reflecting a clear ambition to demonstrate that Africa can be built, produced and compete on a global scale. As one of the group's largest and most profitable business, Dangote Cement plays a central role in delivering this vision. We are targeting revenue of NGN 11 trillion, approximately $4 billion and EBITDA of NGN 5 trillion, approximately $1.5 billion by 2030. Our planned expansion to about 80 Mta, driven by continued investment in high-growth markets will significantly enhance our contribution to group's earnings. This growth will generate substantial foreign exchange through exports and reinforce our track record of operational excellence across multiple African countries, supported by a stronger focus on customer-centric service delivery. In closing, I would like to sincerely thank everyone who joined us today. To our investors, your continued trust and support remain critical to our business. With a strong start of the year, we are confident in delivering an even stronger performance in the periods ahead.