DANGCEM | Not quite an ARM and a leg
DANGCEM's Q3 results continued the trend set in Q1 and Q2, with Nigerian operations outperforming the competition and Pan-Africa struggling to break-even following delays in Tanzania's use of gas substitution for coal. Noteworthy, DANGCEM stated its ambition to enter the Kenyan market and specifically identified ARM Cement as having financial constraints. While this is not a direct indicator that it intends to buy ARM Cement, DANGCEM could be looking at buying its assets in part or in whole. Even if DANGCEM were to buy ARM's assets at book value (c.NGN12bn), this would not have a detrimental effect on DANGCEM's balance sheet. However, this would most likely be dilutive to Dangote's Pan-African EBITDA margins (currently 18% compared to ARM's c.15%).
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