Moody’s Announces Completion of a Periodic Review of Ratings of Dangote Cement Plc

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The Dangote Cement Plc logo stands on a barrier at the under-construction Dangote Industries Ltd. oil refinery and fertilizer plant site in the Ibeju Lekki district, outside of Lagos, Nigeria, on Thursday, July 5, 2018. The $10 billion refinery, set to be one of the worlds largest and process 650,000 barrels of crude a day, should be near full capacity by mid-2020, Devakumar Edwin, group executive director at Dangote Industries said in an interview. Photographer: Tom Saater/Bloomberg via Getty Images

Moody’s Investors Service (“Moody’s”) has completed a periodic review of the ratings of Dangote Cement Plc and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody’s reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody’s practice has been to issue a press release following each periodic review to announce its completion.

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.

Key rating considerations are summarized below

Dangote Cement Plc’s (DCP) B1 corporate family rating (CFR), which is one notch above the Government of Nigeria’s B2 bond rating, considers the serviceability of local currency debt obligations and company’s strong intrinsic credit quality balanced against meaningful linkage and limited ability to withstand stress at the Nigerian sovereign or macroeconomic level.

DCP’s B1 CFR is supported by the company’s strong market presence in Nigeria and other African markets in which it operates. DCP strong business profile benefits from its dominant market position in Nigeria and high gross margins of above 60%. Credit metrics remain conservative with low debt /EBITDA of around 1.0x and high interest coverage above 5.0x, supported by prudent financial policies that ensure credit metrics remain strong through operating and project build cycles.

The ratings are constrained by the single product exposure to cement and small scale level of cement production with high concentration of production in Nigeria. Dangote Cement’s high reliance on short term debt funding and aggressive dividend policy exposes the company to liquidity risk.

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