DANGCEM | Don't cry for me Africa
Pan-African volume growth supported Dangote's volumes in H1 '19. Heavy rains, the election cycle and a brief price war negatively impacted Nigeria's performance in H1 '19. We expect these challenges to alleviate by Q4 '19 and forecast an improvement for H2 ‘19f. Despite volume growth in Pan-African, the segment's profitability was disappointing especially given improved performance in Tanzania. We reduce our Pan-Africa margin forecast and question whether the segment can produce a profit for FY '19. Despite the short-term headwinds, DANGCEM continues to generate positive free cash flow, post world-class cement margins and produce excess returns to its cost of capital.
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