The Dangote Group by Aliko Dangote GCON President/ Chief Executive
Presentation to Business Leaders/CEOs from LBS Lagos, 9th May, 2018
Agenda
Context on the Dangote Group
Overview of our business portfolio and new initiatives
Our strategy
3
Dangote Group is a leader in the new breed of African multi-national conglomerates
We have made a lot of progress over the years…
Top 10 in Africa and Top 400 Globally Globally competitive, growing local
capacity, manufacturing quality products Rapidly transforming from a Nigerian
company to a dominant African brand Listed companies account for 35-40%
of NSE capitalization DCP is most capitalized company on
NSE and in W. Africa
4
We are very bullish on 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 Economy has more than trebled since the turn of the century. By 2050, one person in five in the world will be African, with 63%
urbanization rate. 60% of the world’s uncultivated arable land is in Africa Several growth drivers exist: Political stability, improved macro-
economic environment, micro-economic reforms, rapidly expanding middle class (now 355mn).
Africa is still a land of opportunity…
…but a resilient investor can overcome these
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.
…there are challenges…
However, there are still challenges: Collapse in commodity prices impacting economic growth Huge infrastructure gap, especially power ($100bn annual investment
required) Corruption Low Intra-trade (16%) due to restrictive visa and tariff regimes
…there are challenges…
5
The Group has grown from a commodity trading company to a diversified conglomerate over the last two decades
Company Foundation
Transition Growth
Sustenance
Expansion and Restructuring
Diversification & Consolidation
Started as a commodity trading company
The abolition of the import licensing regime increased the possible scope of operations
Became a leading bulk trader of various commodities
Banking/Textiles
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.
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
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 – Phase I)
Diversification into Infrastructure, Agriculture, Fertilizer, Petrochemicals, Steel, Oil & Gas
Domestic expansion to ensure strong presence along the food value chain
Improved business processes, governance and organizational structure
Consolidation of Cement interests & listing of DC PLC
Expansion of Cement footprint in Nigeria and across Africa
1978 -1997
2000 - 2003 1997 - 2000
2003 - 2007 2007 - present
6
Today we have a rapidly evolving multi-business, multi-geography portfolio
Existing businesses Projects
Cement Food Others Oil & Gas Agriculture Infrastructure
Sugar Salt, Tomato
Paste Seasoning Vegetable Oil
Refining and Fractionating
Flour, Pasta, Noodles
Packaging Logistics Steel Real Estate Mining Automobile
Upstream assets Sub-sea
gas pipeline Petroleum
refinery / petrochem Fertilizer
Rice Sugar cane Tomatoes Dairy
Products
Power Concrete
Roads
Cement plants across Africa
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 Savannah Sugar Company (Numan) - Backward Integration
Dangote Cement PLC Total installed capacity of ~ 46M mtpa across eight countries (Nigeria, Ghana,
Cameroon, Senegal, Ethiopia, Zambia, South Africa, Tanzania, Congo and Sierra Leone)
Additional greenfield and brownfield capacity (~ 22M mtpa) is currently under development in several countries across SSA. Our goal is to expand total installed capacity to ~ 80M mtpa by 2020.
NASCON PLC (Salt Refinery) Currently has a combined installed capacity of 600,000 mtpa. Refines, fortifies and packages table, agricultural and industrial salts Supplies ~ 60% Nigeria’s salt market Oil Palm refinery and fractionation, seasoning and tomato paste Plans are on the way to expand salt refining capacity by 300,000 Mtpa
Additional information on some of our Existing Businesses
Dangote Flour Mills PLC Five wheat milling locations: Apapa, Ikorodu, Calabar, Ilorin, Kano with a combined
installed capacity of 2.45Mtpa Its subsidiary Dangote Pasta produces pasta from its factory in Ikorodu (installed
capacity of about 228,500 Mtpa) Another subsidiary, Dangote Noodles had its manufacturing operations in Ikorodu,
Calabar & Kano (installed capacity of about 42,110 Mtpa) – NOW SOLD
AG-Dangote Entered into a JV for road infrastructure with Andrades Gutierrez (AG) The AG Group is one of the largest infrastructure conglomerates in Latin America. AG-Dangote pioneered the building of concrete roads in Nigeria with its landmark
project, the 23 km road from Itori to Ibeshe in Ogun State Leveraging on the success of its project in Ogun State, AG secured the contract for
the reconstruction of 42km Obajana-Kabba-Ilorin road in 2016 (on-going)
Additional information on some of our Existing Businesses
Dangote Agrosacks Plant capacity ~ 648 million bags per annum Largest polypropylene bag manufacturing company in the world
Dangote-Black Rhino Developing a 100 MW Solar Power Plant in Kano state, Nigeria
Dangote-SinoTruk Truck Assembly Plant capacity ~ 10,000 units per annum
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Nigeria has moved from import dependency to self sufficiency
95%
5%
Local Production Cement Imports
24%
76%
Highly import dependent - 76%
No cement production by Dangote
2003 Consumption: 8.4 MMt
Imports no longer significant – only 5% (these imports are based on legacy import permits which will expire in 2018)
Dangote’s production capacity
– 29.25 MMt
2015 Consumption: 21.5 MMt
2017 Consumption: 20.0 MMt
Imports practically eliminated
Exports commenced from Nigeria into West Africa
The group has invested over $7bn in the last 15 years. Almost 10% of the total FDI inflows during that period
Obajana Cement Plant
~2.50
Others1 FDI inflows (2003-16)
Total
~ 7.06 77.12
~ 0.52
Gboko Cement Plant
~ 0.75
~ 0.29
Transport
~ 1.00
Dangote Sugar
Ibese Cement Plant
~ 2.00
Most of this goes into Oil & Gas. Very little goes into Manufacturing
1- Dangote Flour Mills; NASCON;
Dangote Group investments in Nigeria vs. FDI inflows, USD bn
11 SOURCE: National Bureau for Statistics
Dangote Group 2016 revenues are equivalent to 11% of 2016 manufacturing GDP
Dangote Group Revenues
11%
89%
Manufacturing GDP
Contributions to the Nigerian economy Tax contributions
– Significant tax contributions – DSR alone has paid over N251 billion of taxes
between 2007 – 2017. Employment
– Direct: ~30k – Indirect: ~100k (driver assistants, mechanics,
sales agents, third party transporters) Social
– About N2bn spent annually on CSR – Over 1,000 people trained by the Dangote
Academy (engineers, technicians, artisans). 70% of these were absorbed into the Group
Other – Self-sufficiency in cement – FX earnings from cement exports
Dangote Group revenues as proportion of manufacturing sector GDP, %
12
Dangote Group has an investment pipeline of over $20bn for Nigeria
1 – For Urea and NPK plants 2 – Includes acquisition cost
ALL projects are in various stages of progress
Investment pipeline, USD bn
2.21.8
3.0
1.32.0
23.3
11.0
Power Sugar Backward Integration
Fertiliser1 Rice Production
1.0
Refinery Upstream Oil & Gas2
Gas Pipeline (EWOGGS)
1.0
Total Cement Projects
Agenda
Context on the Dangote Group
Overview of our business portfolio and new initiatives
Our strategy
The Dangote Group is growing rapidly with revenues expected to grow by 7.5X in the next 5 years
Key ongoing and future projects
Refinery and fertilizer
Oil & Gas (EWOGGS, Upstream)
Agric projects
International diversification
Current and projected revenues USD Bn
~4
2017
~30
2022p
7.5X
15
The Dangote Group is driving 6 major projects which will create ~290 thousand jobs and provide FX earnings / savings of ~$15.5bn
Refinery & petrochem
Fertiliser
Sub-sea gas pipeline
Local rice production
Local sugar production
Cement capacity expansion
50k
10k
5k
150k2
70k2
5k
8.6
0.5
6.0
6.9
6.0
0.9
0.0
0.4
1.1
0.5
1.0
12.0
15.5 290k3 Total
1
2
3
4
5
6
Job creation1
Est. # of jobs FX earnings / savings for the country Est. USD bn
Total investment of ~$20bn across the 6 projects
Earnings Savings
1 Direct and indirect jobs during construction & operations 2 Includes out-growers
3. Excludes jobs in Tomato and Dairy
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The refinery & petrochemical project will ensure fuel sufficiency for Nigeria
Capacity: 650,000 bpd - largest single unit refinery in the world 0.84 mtpa polypropylene, AND 0.5 mpta
polyethylene Location: Lekki Free Trade Zone, Lagos
(2100 hectares site) Investment: circa $11 billion
Progress
Civil and UG Piping Construction Contracts are awarded; Contractors mobilized at Site Training of Nigerian manpower graduates
to operate the Refinery has commenced. First batch of 50 engineers sent to India.
Project information
Progress
Site clearing is almost complete Sand filling with ~50 million cum of sand is
99% complete Detailed engineering is about 95%
complete 90% Procurement – completed.
Not Actual Complex: for illustration purposes only
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The refinery & petrochemical project will ensure fuel sufficiency for Nigeria
Benefits for Nigeria FX savings: will save approx. $6bn of FX and
further earnings of $6bn from exports Job creation:
During construction there will be jobs for up to 60,000 people directly and indirectly, of all categories Permanent jobs of about 1,500 directly Up to 15,000 indirect jobs in the
community (support services etc.) Will also spur activity in the banking
sector. Significant skills transfer and technology
acquisition opportunities for the country Security: Security of local supply of petroleum
products will be guaranteed (15,000 petrol stations across the country) Also supply of petrochemical feedstock (poly-
propylene & polyethylene) will be enough for Nigerian market and neighboring countries.
Challenges Logistics for delivery of oversized cargo to
the site from the ports Availability of large scale equipment Access to FX to fund equipment purchases
and payment for offshore services
18
The fertilizer project will contribute to national food security and sufficiency for Nigeria
Capacity: 3.0 Million Tons of Urea Per Year (2 x 1.5 MMTPA) Location: Lekki Free Trade Zone, Lagos Investment: circa $2 billion Feed Stock : Natural Gas
Project information
Progress
97% Engineering & 95% Procurement completed 90% of Equipment received at site Civil works has commenced All necessary equipment are either on site
or in the country
Challenges Logistics for delivery of oversized cargo to
the site from the ports Implementation of the largest Ammonia /
Urea Ultra modern Fertilizer complex in the world at a single location with related maintenance & Operation support facilities.
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Fertilizer project
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The fertilizer project will contribute to national food security and sufficiency for Nigeria
Benefits for Nigeria
FX savings: will save ~$0.5bn from import substitution and provide ~$0.4bn from exports Job creation:
During construction about 4 – 5,000 directly and indirect jobs of all categories 500 permanent direct jobs Up to 5,000 jobs indirectly in the
community (support services etc.) Will also spur activity in the banking
sector. Security: Security of local supply of fertilizer
will be guaranteed Supply of fertilizer will be enough for
Nigerian market and neighboring countries.
21
The EWOGGS pipeline project will unlock significant gas supply for industry
Capacity: 2 x 1,500 mscfd of gas 2 x 36” x 550km
Location: near Bonny Island to Lekki Free Trade Zone, Lagos Investment: ~$3 billion Will supply enough gas to generate 12,000
MW of power
Project information
Progress
Feasibility and Concept Selection Study is now complete Currently at the detailed engineering phase Geophysical (route) survey is almost
complete Geotechnical survey in progress
Challenges Access to FX to fund equipment purchases
and payment for offshore services Secured, reliable, long-term gas supply to
the pipeline. This often requires high investments & long lead times on the E&P company’s side
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The EWOGGS pipeline project will unlock significant gas supply for industry
Benefits for Nigeria
Security of supply: Improved gas supply security for use by power plants, fertilizer production and other industrial factories (current national supply is 1,000 mscfd) Gas Infrastructure: The project will
complement the existing gas supply system in the country, e.g Escravos-Lagos Gas Pipeline System (ELPS), West African Gas Pipeline (WAGP). It will also complement the Nigerian
Gas Master Plan. Multiplier: It will stimulate investments by
IOC & other gas asset holders to develop their fields; increasing supply and reducing flaring. It will similarly stimulate industrial
demand & growth and 1000s of indirect jobs
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Agriculture & Agro Processing
RICE - Project information
Capacity: 1m MTPA milled, parboiled rice Location: 100,000 Ha across Adamawa, Oyo,
Edo, Jigawa, Kano, Kebbi, Nassarawa, Niger, Sokoto, Taraba & Zamfara Community: 40% of paddy to be provided by out
growers Approach: 2 phases over the next 3 years (total
project will produce 1m MT milled, parboiled rice)
Capacity: 1.5M MTPA refined sugar by 2025
Location: 150,000 Ha across Adamawa, Niger, Nassarawa, Sokoto, and Taraba
Community: 30% of cane to be provided by out growers
Approach: 1.25m MTPA refined sugar to be produced by 2020
SUGAR- Project information
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TOMATO - Project information
Location: Kaduna, Kano and Kastina Total Land to be cultivated: 6,000 ha (30% out
growers) Commercial Farmland to be acquired (HA) :
4,200 ha 156,000 mtpa tomato paste
Agriculture & Agro Processing
Location: Adamawa, Kano, Kogi, Kwara and Nassarawa Commercial Farmland to be acquired (HA) :
234,000 ha 156,000 mtpa powdered milk by 2019 to make
Nigeria self sufficient in milk production Nigeria will be in a position to export milk by 2020
DAIRY - Project Information
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Power
Signed a $5billion MoU with Blackstone Group to invest in energy infrastructure in Sub Saharan Africa
Actively pursing the development of power
projects in Kano (Nigeria) and in Togo and Benin Republic
Initiatives
Agenda
Context on the Dangote Group
Overview of our business portfolio and new initiatives
Our strategy
27
Our strategy rests on five pillars
Identify Sweet Spot (where to play) Provide basic needs
(recession proof) Diversify – sectors,
geographies Substitute imports and
earn FX from exports - $7bn FX from down-stream investments Contrarian mind-set -
invest in a downturn
Execute efficiently
New plants and technologies (huge advantage vs. incumbents) EPC contracts for all major
projects Environmentally friendly
operations with low emissions Obtain the best equipment
at the best value - at least 30% discount! Flexible financing
Operate effectively
Enter new markets with highest quality products Huge energy efficiency -
produce power at 4c/Kwh vs. 15c/Kwh national average for residential customers Integrate and drive
efficiency across the value chain – captive power, ports / jetties, coal mines, haulage (12,500 trucks: Largest privately owned fleet in Africa) Local sourcing of raw
materials
Strategic Partnerships - GE, Sinoma, Saipem, Black Rhino, Carlyle, …
Human Capacity - talent acquisition and development (in-house training academy)
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Thank you!
Q&A
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