BLUEPRINTS FOR SUCCESS IN 2016 AND BEYONDPERSPECTIVES FROM THE DANGOTE GROUP
by
Abdu Mukhtar
Group Chief Strategy Officer
Dangote Group
January 28th, 2016
Objectives
 Provide information on the activities of the Dangote
Group
 Give an insight into our new business initiatives
 Highlight Strategies for navigating current
macroeconomic challenges
 Share basic lessons on entrepreneurship (youth)
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Our Evolution
1978 - 1997
The Early Days
 Started as a trading
company in 1978 to
take advantage of
the rising demand
for various
commodities
 Abolition of import
licensing regime, led
to increase in scope
of operations
 Became a leading
bulk trader of
various commodities
1997 – 2000
Transition
Phase
 Transformed from a
bulk commodity
trading company to
a manufacturing
concern via an
import substitution
strategy along the
Group’s traditional
business lines.
 DIL incorporated as
the vehicle for
executing growth
strategy
 Developed brand
equity for products.
2000-2003
Growth
Sustenance +
Expansion
 Acquisition of strategic
assets
 Expansion of existing
capacities
 Prudent management/
strategy of reinvesting
funds
 Improved business
process and structure
to align with the
Group’s business
vision
2003 - 2007
Expansion +
Group
Restructuring
 A massive
conglomerate with
annual group
revenue of
US$1.6bn(FY06)
 Spin off of Sugar,
Flour, Salt and Pasta
divisions to wholly
owned subsidiaries
 Successful IPO and
listing of Sugar, Flour
and Salt businesses
 Commissioned the
largest cement plant
in sub-Saharan Africa
– Obajana Plant
(5MMtpa)
2007-Date
Diversification,
Expansion +
Consolidation
 Diversification into
Infrastructure,
Agriculture, Fertilizer,
Petrochemicals, Steel,
Oil & Gas.
 Domestic expansion
to ensure strong
presence along the
food value chain
 Strong asset base and
brand equity
 Improved business
processes,
governance and
organizational
structure
 Consolidation of
Cement interests &
listing of DC PLC
 Expansion of Cement
footprint in Nigeria
and across Africa
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Some Investments made by Dangote Group
(operational)-20% NSE Capitalization
DANGOTE
SUGAR
REFINERY
PLC




Current capacity - 1.44M mtpa
Largest in Sub-Saharan Africa and 2nd largest in the world
Unfortified Industrial White Sugar and Vitamin A-fortified White Sugar
Leader in the Nigerian sugar market, ~ 65% market share
NASCON
PLC (SALT
REFINERY)




Currently has a combined installed capacity of 600,000 mtpa.
Refines, fortifies and packages table, agricultural and industrial salts
Controls ~ 60% Nigeria’s salt market
Palm refinery and fractionation, seasoning and tomato paste
DANGOTE
AGROSACKS
LTD
 Plant capacity ~ 648 million bags per annum
 Largest polypropylene bag manufacturing company in the world
DANGOTE
CEMENT
PLC
 Combined installed capacity – 29M mtpa from 3 integrated cement plants
located at Obajana (13), Gboko (4) and Ibese (12) in Nigeria
4
Some Investments made by Dangote Group
(on-going)
 Projects (total capacity of 9 million mtpa) are on-going in Nigeria (3m in Benue &
CEMENT
6m in Shagamu)
 Projects (total capacity of 23 million mtpa) are at different stages of development
in 16 African Countries
 All projects will be completed between 2016 and 2018
PETROLEUM
REFINERY/
PETROCHEM.
COMPLEX
 Will be the largest oil refinery in the world - 650,000 bpd capacity ($12 billion)
 Petrochemical complex – 1.2M mtpa polypropylene
 2,700 Hectares of land in Lekki Free Trade Zone
FERTILIZER
 Combined capacity of 2.8M mtpa Urea and Ammonia (will
be Africa’s largest Ammonia
& Urea Plant)
 260,000 Ha of sugar plantation will be cultivated and refineries to produce
SUGAR
OTHERS
20MT cane and 2MT sugar will be constructed. $1.8 billion investment
 Other products include ethanol, molasses, bio compost, animal feeds,




Rice ($1billion): 150,000 Ha, 1.5MT Paddy rice, 1MT milled rice
Upstream Petroleum-$1billion JVA with Carlyle Group
Infrastructure (power, gas, construction)-$5billion JVA with Blackstone Group
The Dangote Group will invest $19 billion over the next five years
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CEMENT EXPANSION PROJECTS
End 2011
End 2014
EndEnd
2017/2019
2017
8mta capacity
41.7mta capacity
61.7mta capacity
83.7mta
• Two plants in Nigeria, 8mta capacity
• Obajana 5mta
• Gboko
3mta
• Clear market leader, 50% share
• 50 depots, most extensive distribution
• Leading importer (from Far East)
• $1.5bn revenue
• $0.82bn EBITDA, 56% margin
• Ca.22% sales imported (lower margin)
• Capacity expansion underway
• Obajana: 5mta brownfield
• Ibese:
6mta new plant
• Senegal: 1.5mta new plant
• Nigerian capacity increased to 29mta,
strong market growth anticipated
• Obajana 13.25mta
• Ibese
12mta
• Gboko
4mta
• Work
2014
Highlights:
underway on African capacity
• and
$2.01bn
import/export
revenue facilities to be
• completed
$1.22bn EBITDA,
end 2014
62% margin
• Market
• South
share
Africa
of 64%
+4.2mta
at Nov 2014
• Ethiopia (1)
+2.5mta
• Work
• Zambia
underway
(1) on+1.5mta
African capacity
and• import/export
Senegal
+1.5mta
facilities to be
completed
• Cameroon
end 2014
(1) +1.5mta
• South Africa +4.2mta
• Ethiopia
+2.5mta
• Zambia (1) +1.5mta
• Senegal
+1.5mta
• Cameroon +1.5mta
• Sierra Leone +0.5mta (TBD)
• Ghana
+1.0mta
• Nigerian capacity 38mta
• Obajana
13.25mta
• Ibese
12mta
• Gboko
4mta
• Sagamu
+6mta
• New Benue +3mta
• Additional capacity across Africa
• Zambia (2)
+1.5mta
• Tanzania
+3mta
• Kenya
+1.5mta
• Cote d’Ivoire
+1.5mta
• Liberia
+0.5mta
• Ghana Takoradi +1.5mta
• Congo Brazzaville +1.5mta
• Nepal
+1.5mta
• Niger
+1.5mts
• Senegal
+1.5mta
• Cameroon (2)
+1.5mta
• Ethiopia (2)
+2.5mta
• Mali
+1.5mta
• Sierra Leone
+0.5mta (TBD)
• Ghana
+1.0mta
• Liberia
+0.5mta
$1.5bn revenue
$0.82bn EBITDA
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The Dangote Group is Very Bullish About Africa
 Africa’s troubled past is steadily giving way……and a new growth story is fast
emerging: Average of 5.5% growth rate over the past 10 years; 2nd fastest growing
region in the world; Economy has more than trebled since the turn of the century.
 By 2020, Africa’s collective GDP will be ~$2.6 trillion, with ~$1.4 trillion spending
power.
 By 2050, Africa’s est. population of 2B will overtake that of India (1.6B) and China
(1.4B). One person in five in the world will be African, with 63% urbanization rate.
 Several growth drivers exist: Political stability, improved macro-economic
environment, micro-economic reforms, rapidly expanding middle class (now 355M).
 An industrial resurgence is on the way: Renewed commitment, better policies and
improving business environment.
 And it is not just Dangote: Coca-Cola ($5B), GE ($1B) Bombardier, Ford Motors, PE
Funds, Nestle, Heineken, P&G, etc., are expanding their African footprint.
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Strategies That Are Working For Dangote-1
 Staying true to our mission-Provision of people’s basic needs (recession-proof)
 Foods-sugar, salt, flour, rice
 Shelter-cement (delayed demand but essential)
 Petroleum products and petrochemicals; Energy
 Diversification
 Geography (50% non-Nigerian cement revenues by 2018; 18 countries +)
 Sector (Petrochemicals, Agriculture, Power)
 Low Cost Production (upsets cost escalation from inflation and devaluation)
 Captive Power-500MW in Nigeria, 90MW in Zambia/Senegal
 EPC contracts for all major projects
 New plants and technologies (huge advantage on competitors)
 Don’t cut corners
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Strategies That Are Working For Dangote-2
 Keying into Government Policies
 Backward Integration-cement, sugar, oil & gas
 Import Substitution ($21B petroleum products; $1B rice)
 $8-10B FX from petroleum products, polypropylene and polyethanol
 $1.5B FX from fertilizer
 Local Sourcing of Raw Materials
 Gas supply to Lekki for Refinery & Fertilizer; “Qatar of Africa”
 Coal for energy (great reserves in Benue, Kogi and Enugu)
 Limestone, etc.
 Contrarian Mind-set: Investing in a downturn
 Super cheap equipment
 Flexible financing
 Logistics: 7,500 trucks: Largest privately owned fleet in Nigeria
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Strategies That Are Working For Dangote-3
 Strategic Partnerships
 General Electric (GE) & other equipment manufacturers
 Sinoma, etc.
 Developing Human Capacity
 Dangote Academy (in-house)
 Training partnerships
 Aggressive talent acquisition
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Final Thoughts on Entrepreneurship-The 5Ps
Purpose
..and two new additions..
Passion
Positive
Presence
Pray
Partnerships
Perseverance
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Thank you for your attention
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