MON, 09 MAY, 2022-theGBJournal | Fitch Ratings has assigned Dangote Industries Limited (DIL) a Nigerian National Long-Term Rating of ‘AA(nga)’ with a Stable Outlook.
Fitch has also assigned an expected National rating of ‘AA(EXP)(nga)’ to the senior unsecured notes to be issued by DIL’s SPV, Dangote Industries Funding Plc. The final instrument rating is contingent on the receipt of final documentation conforming with information already reviewed.
DIL is planning to establish a local bond programme amounting to USD750 million to partially finance the completion of its refinery and petrochemical plant. Dangote Oil Refining Company Limited (DORC) and Dangote Fertiliser Limited (DFL), DIL’s subsidiaries, will be co-obligors under the proposed programme.
DIL is a diversified conglomerate in Nigeria with a leading share in the cement business and a future key operator in the petrochemical industry through its fertiliser and oil refinery business. Its strategy is to gradually establish a downstream industry in Nigeria and be the largest urea producer in Nigeria. It also aims to make Nigeria a net exporter of refined petroleum products and petrochemicals by 2026.
KEY ASSUMPTIONS
– Cement business to average USD1.1 billion p.a. EBITDA contribution in 2022-2025
– Urea plant line 1 to gradually ramp up to an average 60% capacity utilisation in 2022-2023 and to around 80% by 2025, from 25% in 2021. Line 2 to start production in April 2022 to around 80% capacity rate by 2025 from 50% in 2022
– Fitch urea price deck assumptions: FOB Black Sea USD500/tonne in 2022; USD300/tonne in 2023; USD250/tonne in 2024-2025
– Urea plant’s 66% EBITDA margin in 2022-2025, increasing consolidated EBITDA margin to 39% in 2022 from 37% in 2021
– Oil refinery to start production in 2H23. Fitch conservatively assumes a six-month delay in production ramp-up versus management expectations with an average gross refining margin of USD10/barrel
– USD1.38 billion capex in 2022
– No dividend payments until 2024 when net consolidated leverage is below 1.5x. Dividend pay-out to equal 90% of net income in 2024-Fitch Ratings
Twitter-@theGBJournal|Facebook-The Government and Business Journal|email: gbj@govbusinessjournal.ng|govandbusinessj@gmail.com
