Moody’s Upgrades Dangote Cement Ratings, Revised Outlook
Moody’s has upgraded Dangote Cement Plc’s credit or long-term corporate family rating (CFR) to B3 from Caa1, probability of default rating to B3-PD from Caa1-PD and long-term national scale CFR to A3.ng from Baa3.ng.
According to the rating note, Moody’s analysts also upgraded the senior unsecured ratings of Dangote Cement’s two N300 billion senior unsecured domestic medium-term note programs (DMTN) to (P)B3 from (P)Caa1 and the senior unsecured medium-term note program (MTN) national scale ratings (NSRs) to A3.ng from Baa3.ng.
“We also upgraded the senior unsecured ratings of the notes issued by Dangote Cement to B3 from Caa1 and the senior unsecured NSR ratings to A3.ng from Baa3.ng. The outlook has been changed to stable from positive”.
Moody’s said Dangote Cement’s operations are largely exposed to Nigeria’s economic environment and the rating action follows its decision on 30 May 2025 to upgrade Nigeria’s government bond rating to B3 from Caa1.
“Today’s rating action on Dangote Cement is a direct consequence of the Nigeria sovereign rating action, because the company is exposed to Nigeria’s economic, political, legal, fiscal and regulatory environment and therefore has high credit linkages with Nigeria’s sovereign rating”.
Moody’s said Dangote Cement’s ratings reflect the company’s sizeable operational concentration in Nigeria, where it generated 65% of total revenue and 82% of total earnings before interest tax depreciation and amortisation (EBITDA) in the last 12 months to March 2025 which exposes the company to the heightened risks associated with the operating environment in the country.
“We consider that Dangote Cement’s strong business profile with a strong brand presence and leading market position in Nigeria, international operations and strong credit metrics including high operating margins, supported by a vertically integrated business model could support a higher rating”.
However, the company’s liquidity, which is highly dependent on the continuing rollover of its sizeable short-term debt and large dividend distributions, including N503 billion paid in 2024, constrains its rating at Nigeria’s government bond rating level of B3.
Dangote Cement’s operations have remained resilient through the last five years despite the economic challenges faced in Nigeria.
The company’s sales volumes surpassed the 27.2 million tons (mt) level, in line with the 27mt average since 2019, despite inflationary pressures in the country.
The sharp Naira devaluation since 2023 has resulted in challenges to pass through all the higher costs of raw materials to customers. Nevertheless, the company has prudent financial policies that ensure credit metrics remain strong through operating and project build cycles.
Dangote Cement’s ratings further take into account the company’s strong market presence in Nigeria and other African markets in which it operates.
The company has high gross margins of above 50% on a Moody’s-adjusted basis and a low leverage of 1.5x, as measured by gross debt/EBITDA as of the last 12 months to March 2025.
Dangote Cement also benefits from an adequate interest coverage ratio of 2.8x during the same period, all metrics including the $675 million loan from African Export-Import Bank that has been fully lent on equal terms and conditions to Dangote Cement’s parent company Dangote Industries Limited (DIL).
“We expect Dangote Cement to fully repay the loan as soon as DIL completes its refinancing process, and to maintain strong credit metrics during the next 12 to 18 months”.
The ratings factor in the company’s relatively small scale of cement production when compared to global peers, as well as single product exposure to cement, Moody’s said.
The ratings also take into consideration Dangote Cement’s aggressive dividend policy, its high reliance on short term debt funding exposing the company to liquidity risk, and the increased amount of its loans to the parent company.
Because of these factors, which we view as governance risks, we changed Dangote Cement’s governance issuer profile score to G-4 from G-3.
Dangote Cement’s liquidity, including N413 billions of cash as of 31 March 2025, is adequate but exposed to ongoing refinancing risks because of the large portion of short term debt equal to N887 billion, representing 37% of total debt as of the same date.
This proportion would increase to above 65% excluding the $675 million loan from African Export-Import Bank.
While Dangote Cement has a track record of strong cash generation, Moody’s said the company’s free cash flow for the last 12 months to March 2025 was negative N357 billion due to a large dividend payment of N503 billion, which temporarily weakened its liquidity, along with large working capital outflows.
“We assume that Dangote Cement has flexibility to reduce its annual dividends. However, historically its main shareholder DIL, which owns 85.75% of Dangote Cement, has been reliant on these funds to help complete its oil refinery project which is now complete and operational.
“We recognize that Dangote Cement has a good track record of accessing the local funding market given its low leverage, blue chip corporate status in Nigeria and good relations with local banks”.
Moody’s said the stable outlook is in line with the stable outlook on the Government of Nigeria, reflecting Dangote Cement’s close credit links to the Government of Nigeria and operational exposure to the country’s political, legal, fiscal and regulatory environment. #Moody’s Upgrades Dangote Cement Ratings, Revised Outlook#
