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Operational Review
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
Overall Group cement sales increased by 25.0% from
18.9Mt in 2015 to nearly 23.6Mt in 2016. Sales volumes
increased in every country as more businesses posted
their first full financial year of cement sales and
increased market shares in their respective countries.
Nigerian operations increased total sales volumes by
13.8% to more than 15.1Mt, of which approximately
14.8Mt was sold in the Nigerian market, where we
improved market share to 65%. Export sales were
366Kt during 2016. Our sales growth was particularly
high in the first eight months of 2016, driven by lower
pricing introduced in September 2015, improved
marketing and substantially lower importation.
Pan-African volumes rose by 54.0% to slightly more
than 8.6Mt, with a 0.6Mt maiden contribution from
Tanzania, nearly 2.0Mt of cement sold in Ethiopia and
a 73.9% increase in volumes in Ghana, which sold 1.1Mt
of cement in 2016.
As a result of the increased sales, Group revenue
increased by 25.1% to ₦615.1B (2015: ₦491.7B). Before
₦6.1B of adjustments for inter-company sales, Nigeria
increased revenue by 9.5% to ₦426.1B (2015: ₦389.2B).
The impact of the ₦600/bag price increase introduced
in Nigeria in September was felt in the final quarter of
the year. Pan-African revenue increased by 88.5% to
₦195.0B, or 31% of Group revenue (2015: ₦103.5B, 21%).
Manufacturing and operating costs
Year ended
Materials consumed
Fuel & power consumed
Royalties paid
Salaries and related staff costs
Depreciation & amortisation
Plant maintenance costs
Other production expenses
Increase in finished
goods and work in progress
Total manufacturing costs
31-Dec-16 31-Dec-15
₦m
₦m
87,203
112,265
1,382
24,019
51,245
29,063
21,165
(2,526)
323,816
55,623
66,495
1,138
15,263
38,243
18,331
10,830
(4,115)
201,808
EBITDA
Depreciation & amortisation
Operating profit
In general, manufacturing costs increased in line with
increased production volumes driven by higher sales
in Nigeria and our operations in Senegal, Cameroon,
Zambia and Ethiopia ramping up production
throughout the year, as well as maiden operations
in Tanzania. Comparative costs for 2015 represent
less than 12 months of trading in Zambia, Ethiopia
and Cameroon, which began operations during 2015.
In addition, disruption to gas supplies in Nigeria
increased manufacturing costs by ₦13B because of
higher use of LPFO, which is almost 2.5 times higher
than the cost of gas per tonne of cement manufactured.
Administration & selling costs
Year ended
Administration & selling costs
31-Dec-16 31-Dec-15
₦m
₦m
119,336
86,046
Total selling and administration expenses rose by
38.7% to ₦119.3b, mostly as a result of higher sales and
associated distribution costs in Nigeria, as well as the
ramp-up and increased sales in Senegal, Cameroon,
Ethiopia, Tanzania and Zambia.
The depreciation of the Naira from ₦199/$1 at the end
of 2015 to ₦304/$1 at the end of 2016 also contributed
to the overall increase in operating costs for the PanAfrica
operations, as costs incurred in local currency
were converted into Naira.
Profitability
Year ended
31-Dec-16 31-Dec-15
₦m
₦m
257,243
(74,750)
182,493
EBITDA contribution by operating region
Year ended
Nigeria
Pan-Africa
Central costs & inter-company
Total EBITDA
241,969
26,456
(11,182)
257,243
262,448
(54,626)
207,822
31-Dec-16 31-Dec-15
₦m
₦m
247,479
25,070
(10,101)
262,448
Annual Report 2016
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