Dangote leverages turnaround for global competitiveness
Category: Investors NewsBeat
The turnaround programme of development and expansion in the Dangote Group has been described as an orchestrated chain involving marked focusing, determination and employment of right and advanced tools needed for economic growth.
The Deputy Managing Director, Dangote Flour Plc, Shuaib Idris, stated this in an interview shortly after the company‘s annual general meeting, attributed the group‘s growth to the recent restructuring programme carried out in the group.
Idris, who is generally regarded as a turnaround expert, said the group‘s re-engineering in the area of its strategic focusing, which especially saw it focusing on life‘s essentials, including food and cement and other household requirement, had further strengthened the group‘s positioning in the Nigerian and West African markets. According to him, the programmes had been yielding good dividends. This, he said, had seen the group achieving phenomenal successes.
Specifically, he said the group had diversified its operations in the food sector. He cited the decision of the group to increase its capacity by building additional factories in this sector. The building of a highly noodles factory at Ikorodu was a clear indication of where the group was headed.
He, however, said the group‘s expansion was not limited to food, as exemplified by the recent capacity upgrade in the Calabar cement factory.
Meanwhile, the Group‘s Chairman, Alhaji Aliko Dangote, had earlier in his address, described the financial year under review as a difficult one for businesses, both globally and locally, ”as the global financial meltdown imposed challenges on the business environment through reduced access to both local and foreign capital, reduced purchasing power and sustained high price of wheat.”
The strategy adopted by the group to overcome the difficult operating environment, according to Dangote, was to ”focus on internal efficiency to cut down on other areas of costs, the effect of which made the company profit before taxation to increase from N376m in 2007 to N1.8bn.
”Group profits in 2008 also leaped from N676m in 2007 to N3.2bn in 2008, implying N1.4bn Group attributable profits from subsidiaries”.
On the outlook for local and global competitiveness, the group‘s chairman said, the future ”looks better and more promising as wheat prices remain relatively stable in 2009.”
He, however, noted that there were other challenges, such as power and diesel, which have increased, compared to the previous year.
Despite these challenges, he said the group was looking ahead with optimism, especially in the light of the recent inauguration of the Dangote Noodles factory in Ikorodu, Lagos and two more to be commissioned in Kano and Calabar in the near future.
He added, ”It is also anticipated that the expansion of the production capacity in the factories in Apapa, Calabar and Ilorin will increase the production from the current 4,800 metric tonnes of milling capacity per day to 7,300 metric tonnes.”
The expansion plan, according to him, had also been boosted by the Group‘s recent unaudited result for the nine months ending September 30, 2009, which indicated some exciting prospects. The results showed that turnover for that period was N46.95bn, surpassing the whole turnover realised in the financial year of 2008. Profits after tax for the nine months period were N7.6 billion, an increase of 155 per cent over the financial year 2008.
He, therefore, declared an interim dividend of 30 kobo per share for the group, based on the nine months unaudited accounts of the Group, which ended in September 2009.
Taking a peep into some of the challenges that the global environment might pose to the company in the years ahead, Dangote said he was confident that the Group ”is financially well insulated to cope with any challenges that may arise from these crises.”