Dangote Cement Hits N7Trn Amidst High US Dollar Debt
Investors ramping up more shares of Dangote Cement Plc ahead of the earnings release has raised the company market valuation above N7 trillion. Data obtained by MarketForces Africa from the Nigerian Exchange showed the cement giant market valuation surged to N7.018 trillion at a unit price of N411.9.
Dangote Cement Plc had fallen to the third level in the market valuation ranking despite a slowdown in its share price volatility. The cement giant is expected to release its earnings scorecard next month as part of the listing requirement. Noted to be a dividend aristocrat, some analysts hope to see the company sustaining its payout ratio amidst a steep increase in balance sheet leverage.
High Dollar Debt Exposes Dangote Cement to Risk – Notes
Moody’s said in a report that Dangote Cement’s high proportion of short-term debt maturities and dollar debt in the capital structure exposes the company to refinancing and currency convertibility risk. Nigeria Eurobond Slumps after CBN Resumes OMO Auction
The company continues to grow its non-Naira based revenue through exports and repatriations of cash flow from its other African operations. Nevertheless, the rating agency said the company is still reliant on the Central Bank of Nigeria for dollars to convert such cash flows and service its debt requirements.
The company’s liquidity profile is adequate but is exposed to ongoing refinancing risks because of the large portion of short-term debt equal to N573 billion, representing 61% of total Moody’s adjusted debt as of 30 September 2023.
While Dangote Cement Plc has a strong cash generation profile with N38 billion positive free cash flow for the last 12 months to September 2023 and a cash balance of N380 billion, it pays large dividends (N337 billion in Q2 2023) which can temporarily weaken its liquidity. #Dangote Cement Hits N7Trn Amidst High US Dollar Debt
