Nigeria’s cement industry continues to boom - CNBC Africa

Nigeria’s cement industry continues to boom

Western Africa

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Three of the current largest players in Nigeria’s cement industry include Dangote cement, Ashaka Cement and Lafarge WAPCO.

Nigeria's local cement industry output was pinned at 10.5 million tonnes in 2010 to 28.6 million tonnes in 2011. This year’s half year results for the cement industry continue to indicate no slowdown in the industry.

“Dangote sales volumes grew about 29 per cent year on year while Lafarge Wapco turnover increased 10 per cent, compared to Ashaka, which declined 5 per cent. This is where you see the mixture of Dangote and WAPCO, who seem to have the spare capacity, are the better performers in the industry, and of course the margins also reflect this,” CSL Stockbrokers equity analyst Oludare Fajimolu told CNBC Africa on Tuesday.

Dangote cement aims to attain a total capacity of 60 million tonnes by the end of 2014. The company also saw growth in revenue by 20 per cent year on year, largely due to increase in volume from its plants.

“Dangote and WAPCO have spare capacity, so we expect that they will increase volumes going further in the second half of the year. The last quarter of the year is a dry season, which is very supportive of construction activities so during this period demand tends to go up and as a result of that, you tend to see stronger earnings,” Fajimolu explained.

“The fact that these companies are reporting good turnover growth, you can safely assume that now that we’re in Q3, we expect that they will still do very well because the demand is there.”

Dangote Cement is estimated to sell about 13.5 million tonnes of cement this year and have currently already sold more than six million tonnes.

The massive expansion seen in local cement production companies is a positive aspect for the African continent because the growth in volumes and expansion will increase job creation and job opportunities.

Other top cement companies in the continent include Bamburi Cement in Kenya, which is also East Africa’s biggest cement supplier, Suez cement in Egypt and Pretoria Portland Cement, which has milling depots in South Africa, Zimbabwe and Botswana.  

“We expect African governments to tap into this, boost infrastructure development in these countries, even apart from Nigeria, it’s good news for Africa,” said Fajimolu.