Rating agency, Fitch, has affirmed Dangote Industries Limited's (DIL) National Long-Term Rating at 'AA(nga)' with a Stable Outlook.

Fitch has also affirmed the senior unsecured notes issued by Dangote Industries Funding Plc at 'AA(nga)'.

The rating reflects DIL's strong business profile, supported by its profitable main operating companies including Dangote Cement Plc and Dangote Sugar Refinery Plc, with entrenched market positions across Africa, and strategic importance to the economy.

“The Stable Outlook reflects our expectation that DIL will be able to deleverage and improve the overall financial profile by ramping up production and generating material cash flows from its fertiliser and refinery businesses. In addition, we expect that further diversified revenue streams will improve earnings stability”, it stated.

Oil refinery at critical stage

Fitch expects the oil refining project to be commissioned by October 2023 with minimal cost overruns.

It understands that the majority of the refined products will be exported, despite the high dependence of the domestic market on imported refined fuel.

The majority of the refinery's 450,000 barrels per day crude oil requirement will be sourced through related party Nigerian National Petroleum Corporation (NNPC) and other international suppliers. An inability to source sufficient levels of crude domestically would dampen production capacity.

Established cement operations

Fitch expects EBITDA margins from cement to slightly drop to 44% in 2023 from 49% previously, partially due to rising commodity prices.

The company is focused on a continued export strategy, with 1.58 million tonnes (mt) of cement and clinker exported to African markets.

The company has a combined cement production capacity of 51,600 kt from its factories across seven African countries.

Nigeria is the largest contributor with a production volume of 17,786 KTPA in 2022.

Despite a 5% dip in 2022 sales volumes, mainly in its Nigerian operations, Fitch expects strong sales momentum for 2023, supported by growth of the pan-African operations.