The Nation Newspaper

Tag: Wapco

  • Our story, by LafargeWAPCO’s image maker

    Our story, by LafargeWAPCO’s image maker

    In an exclusive interview with The Nation, Ade Ojolowo, Corporate Communications Manager (CCM) of LafargeWAPCO, dismisses the natives’ claims, stressing “Lafarge’s Corporate Social Responsibility for its host communities is need-based, strategic, and highly sustainable.” Excerpts:

    HOW would you rate Lafarge’s Corporate Social Responsibility (CSR) programme for its host communities?

    Lafarge’s Corporate Social Responsibility for its host communities is need-based, strategic, and highly sustainable.  Lafarge in its CSR approach recognises its host communities as strategic partners to whom it owes and accords sense of mutual respect, believing that its footprints should, in its overall assessment, be a blessing to its host communities. Our CSR activities are hinged on five cardinal points, including physical infrastructure, youth empowerment, education, health, and poverty alleviation.  It is widely believed that CSR programmes anchored on the afore-mentioned points are capable of engendering lasting social responsibility.  Lafarge has made huge investments woven around these activities in its behaviour as a good corporate citizen to its host communities. Our track records speak volume, and viewing it from that perspective, Lafarge’s CSR can be rated very high.

    Recent press reports seek to establish your company as a good corporate citizen but several residents of your host communities allege that the reality is actually very different from what the media reports. How would you react to this?

    The likelihood of a few people who may not share the belief in a structured and sustainable approach to a programme as crucial as corporate social responsibility cannot be ruled out. However, we are convinced that we have the majority on our side in the corporate belief in landmarks that will benefit all, propel the growth and development of the communities and touch the lives of the children of the peasant farmers.

    In Ewekoro Local Government alone, for the purposes of touching lives, we structured the host settlements into 12 development communities. We have a monthly community meeting where all the communities are represented by the leaders they appointed and presented to us, and their youth leaders.  At the beginning of the year, each community makes a proposal of the project of its choice, and even suggests the contractors to handle them to Lafarge.  It is a grand rule that community projects are assigned to community contractors most of whom are the community leaders and indigenes. Each community has a budget in millions of Naira annually for their priority projects.

    It may interest you to note that through this approach, several roads are being built, physical building projects like schools, town halls, rural electrification projects, to mention a few, are executed. Lafarge will not get involved in enriching a handful in a community, however they may wish, but will rather take bold steps visible to all, including government, to see.

    The residents of Lapeleke, for instance, allege that due to limestone blasting activities of your company in their vicinity, their village has been rendered desolate; their once viable and thriving agricultural economy has been devastated along with their homes. How would you react to the allegation?

    Lapeleke is one of the 12 communities that we relate with on a regular basis.  The community has a functional Baale that is recognised by the Ogun State Government. How come it has become so desolate? You may wish to know how much a piece of land for residential purposes go for at Lapeleke.   One really wonders where all these are coming from? For the avoidance of doubt, Lafarge is known for priority focus on health and safety. We have zero tolerance for any unsafe behaviour or lifestyle not only among our staff and this is extended to all stakeholders, including our host communities.

    In a recent interview with The Nation, you stated that Lafarge is committed to relocating communities located close to the company’s quarries, why haven’t the company instituted a similar measure to assist the inhabitants of Olapeleke village?

    Obviously, it is not only the communities marked for relocation that now appreciate Lafarge’s gesture. It may interest you to know that it was Lafarge’s initiative to relocate communities that are very close to our operations, and it will soon fully be achieved.  Of course, if Lapeleke is discovered to be characterised by the same factors as those of the communities to be relocated, it would also be considered at some point in time. It is one step at a time.

  • The rising profile of Lafarge Wapco

    The rising profile of Lafarge Wapco

    This is a momentous period for Lafarge Cement Wapco Nigeria Plc, both in Nigeria and globally. From the landmark global merger that would consolidate Lafarge’s global leadership in cement and building materials to the consolidation of Lafarge’s operations in Nigeria and South Africa to create Lafarge Africa Plc as a continental leader, Lafarge Cement Wapco’s fundamentals and operations appeared on a formidable structure. As shareholders of Lafarge Cement Wapco Nigeria meet today at the Annual General Meeting (AGM), Capital Market Editor Taofik Salako reports on the key considerations that will dominate the meeting

    Today’s annual general meeting is important to Lafarge Cement Wapco Nigeria Plc and also its shareholders. With 175 per cent increase in dividend payout and sustained growths in key fundamentals over the periods, the mood for the meeting, for speculative and short-term investors, could be dictated by the growing earnings and returns of the cement company. But for most of the shareholders, the long-term investors that have traversed the decades with Nigeria’s oldest cement company, the main considerations would be the emerging opportunities in the continental and global consolidations being spearheaded by Lafarge.

    Lafarge Wapco had grown net earnings by 92 per cent in 2013, prompting the board of directors of the cement company to increase dividend payout by 175 per cent. The board of directors had recommended increase in dividend per share to N3.30 for the 2013 business year as against N1.20 paid for the previous year. This underlined continuous growth for investors who had received dividend per share of 75 kobo for the 2011 business year.

     

    Fundamentals of the business

    Key extracts of the audited report and accounts of Lafarge Wapco for the year ended December 31, 2013 showed that profit after tax grew by 92 per cent to N28.2 billion in 2013 as against N14.7 billion recorded in 2012. Profit before tax grew by 30 per cent from N21.3 billion to N27.7 billion. Turnover increased by 12 per cent to N98.8 billion as against N87.9 billion in 2012. The company witnessed significant reduction in interest expenses N5.5 billion to N3.8 billion as a result of the reduction in interest charges due to the full repayment of the Naira syndicated bank loans. Consequently, basic earnings per share grew from N4.90 to N9.42; an increase of 92 per cent.

    Lafarge Wapco’s new ready-mix concrete business contributed N1.6 billion to the total turnover of N98.8 billion. The company not only focused on increasing its turnover but has ensured that its operational costs are curtailed without compromising on service to its customers. The strong operational performance and efficient working capital management resulted in an increase in cash holdings of N11.5 billion. With the company being in a more cash positive position, it was able to reduce its debt by 42 per cent, paying off its variable rate medium term syndicated Naira and foreign currency loans ahead of tenor. Accordingly, Lafarge Wapco’s debt position closed 2013 at N21.5 billion comprising a fixed rate corporate bond and a power intervention fund loan. The debt-to-equity ratio halved to 23 per cent in 2013 as against 55 per cent in 2012.

    Already, emerging results showed positive outlook for the current business year. Lafarge Wapco recorded significant growths in sales and profit in the first quarter of this year as pre-tax profit totaled N8.62 billion in three months.

    Interim report and accounts of Lafarge Wapco for the three-month ended March 31, 2014 showed that sales rose by 16 per cent while pre and post tax profits grew by 20 per cent and 34 per cent respectively. The report showed that turnover rose to N27.03 billion in first quarter of 2014 as against N23.24 billion recorded in comparable period of 2013. Profit before tax increased from N7.20 billion to N8.62 billion. Profit after tax also rose from N6.07 billion to N8.15 billion. Earnings per share grew by 34 per cent from N2.02 to N2.71.

    The company indicated that net finance cost reduced from N980 million to N760 million due to lower interest charges following the full repayment of the Naira syndicated bank loans. Investment income simultaneously grew by N160 million to N260 million.

    Managing director, Lafarge Cement Wapco Nigeria Plc, Joe Hudson, said the good performance in the first quarter was a reflection of the increasing demand for the company’s quality products and an outcome of the implementation of various volume and cost improvement strategies.

    “We are especially pleased that the new line in Ewekoro continues to gain momentum and remain very optimistic about the rest of the year despite the challenging operating environment,” Hudson said.

    Chief financial officer, Anders Kristiansson, noted that the company further strengthened its financial position during the quarter as it remains committed to delivering value to shareholders and other stakeholders in 2014.

    Chairman, board of directors, Lafarge Cement Wapco Nigeria Plc, Chief Olusegun Osunkeye said the latest earnings reports showed steady growth and demonstrated the strength of the company in delivering value to shareholders and to other stakeholders.

     

    Consolidating the leadership

    Besides the earnings and returns, shareholders would focus on emerging opportunities from the new Lafarge as they vote on a proposal to merge Lafarge Wapco with other Lafarge’s business in South Africa. Already, Lafarge Wapco has been the toast of investors since its parent company, Lafarge Group, announced plan to merge its businesses in Nigeria and South Africa to create a new company to be known as Lafarge Africa Plc.

    The consolidation of the South Africa and Nigeria’s businesses will be done through Lafarge Wapco, which will subsequently be renamed Lafarge Africa while sustaining its listing on the NSE. Under the proposed terms, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited, 35 per cent; Ashaka Cement Plc, 58.61 per cent and Atlas Cement Company Limited, 100 per cent; to Lafarge Wapco. The transaction is valued at $1.35 billion while the market value is over $3 billion.

    The transaction will be concluded through a cash consideration of $200 million and the issuance of about 1.40 billion ordinary shares of Lafarge Africa to Lafarge Group. The transaction is expected to be concluded before the end of this year, subject shareholders’ approvals and regulatory and other customary authorizations. Also, Lafarge Wapco plans to raise some N100 billion in new capital, through debt or equity through the Nigerian and global capital markets.

    There are indications that shareholders would approve all the resolutions on the agenda including the consolidation and new capital issue. Ahead of the meeting, most shareholders’ groups have voiced supports for the consolidation and new capital issue as they commended the performance of the company.

    Lafarge has outlined the key benefits of the consolidation. Osunkeye said that the new company will create the platform for strong growth as the transaction allows the company to consolidate its Nigerian operation with that of South Africa.

    “I am proud to be part of the creation of this leading African building materials platform. It will provide access to growth in two of the largest economies on the continent. It will mean that our shareholders are invested in a larger and more geographically diverse business; and it will contribute significantly to the economic growth of both our nations,” Osunkeye said.

    Lafarge executive Vice President and country chief executive officer, Nigeria and Benin Republic, Guillaume Roux said the new platform would strongly position to benefit the two countries and Africa as the company cement capacity currently at 5.5 million metric tonnes will increase to 12 million tones.

    He said the strong operational track record and management skills within the combined businesses as well as continued support and expertise from Lafarge group would position Lafarge Africa to offer a full range of value added solutions to meet customers’ needs.

    “Today’s announcement marks a key milestone. It adds momentum to our push for differentiation in order to deliver innovation that increases and improves our product portfolio. Our objective is to bring more housing and even better solution to contribute to building better cities that are more beautiful, more compact, more connected and more durable,” Roux said.

    Roux had earlier outlined plan double Lafarge’s production capacity in Nigeria as part of a new expansion programme that would see additional investments by the foreign majority shareholders in its Nigerian subsidiaries.

    Roux, who noted that Lafarge had recently increased its capacity from 3.0 million metric tonnes to 8.0 million metric tonnes, said the group would be making new investments in the next few years to double its capacity and strengthen its position as a leader in the Nigerian cement industry.

    He pointed out the historic importance of Lafarge Wapco as the oldest cement company in Nigeria and the operational spread of the group’s business from the south to the north adding that the expansions will also be across the regions.

    He underscored the importance of Nigerian market to the Lafarge global operations noting that the group has continuously demonstrated its commitments to the long-term development of its business and the Nigerian economy by sustained investments, development of new innovative solutions and building of Nigeria’s indigenous know-how and capacity.

    “We will make a lot of new investments in the next few years,” Roux said.

    He said that contrary to recent speculations about presence of low-grade cement products in Nigeria, there could be no low-grade cement in the country as Nigeria has the most modern cement industry in Africa.

     

    Global leader

     Today’s meeting also comes as Lafarge and Holcim of Switzerland take further steps to create a company with more than $40 billion in sales in Europe’s largest deal this year. Both companies on Monday proposed a multi-billion euro series of asset sales as they seek regulatory approval for their merger to create the world’s biggest cement maker.

    Chief executive officer, Holcim, Bernard Fontana said the companies planned to officially apply for approval from EU competition regulators this summer. The tie-up is expected to be completed in the first half of 2015. Both Lafarge and Holcim have repeatedly said their merger, which would create a group with global headquarters in Zurich, would not entail any plant closures or industrial job cuts.

     

    Re-pricing the stock

     While the emergent Lafarge Africa would be the sixth largest company on the Nigerian Stock Exchange (NSE), the NSE  on April 22, 2014 admitted Lafarge Wapco to the special pricing model for the highly capitalised stocks. With this, investors with 10,000 shares of Lafarge Wapco can move the price of the stock as against the 50,000 shares generally required for other stocks. Lafarge Wapco has been trading above N100 in recent period. Lafarge Wapco’s share price closed on Monday at N111 per share.

    Justifying the inclusion of Lafarge Wapco, head, market surveillance, Nigerian Stock Exchange (NSE), Mr. Abimbola Babalola said a review of trading activities of the company in the last six months showed that the company met the criteria set by the Exchange.

    According to him, the Exchange commenced the pilot programme for the “Group B” stocks with nine stocks including Dangote Cement, Guinness Plc, Nestle Plc, Nigerian Breweries, SIM Capital Fund, Skye Shelter Fund, Nigerian Energy Sector Fund (NESF) and Total Plc.

    “The Programme became permanent in 2013 and the nine initial pilot stocks remained. Lafarge Cement WAPCO Nigeria Plc will become the 10th stock on the programme. We have observed that the prices of these high priced stocks have been rather stable with none falling below the N100 mark which is currently the benchmark,” Babalola said.

    Generally, the building and construction industry still holds immense potential. The largest country in Africa, with some 170 million population, Nigeria is in critical need of development of infrastructure and this has continued to grow year-on-year. With steady Gross Domestic Products (GDP) growth, the outlook for the construction industry remains bright as it is generally accepted that the level of GDP per capita positively correlates with the level of construction activity. Investors in Lafarge Wapco would particularly look out for the growth trend that suggests improved benefits from the recent strategic investments.

  • WAPCo targets 134mscf/d gas deal this year

    WAPCo targets 134mscf/d gas deal this year

    The West African Gas Pipeline Company (WAPCo) has set a target of 134 million standard cubic feet of gas per day (mmscf/d) before the end of the year.

    The company, which resumed operation in July, last year almost a year after its pipe was severed by a ship’s anchor in Togolese waters in August 2012, said its goal is to achieve 134mmscf/d gas transportation before end of the year from about 70mmscf/d.

    Its Managing Director, Walter Perez, who took over as the new chief executive officer three months ago, told The Nation of his intentions and targets for the firm in his first tenure.

    He said he would bring his rich experience in pipelines, collaborate with the four countries that own the company, Economic Community of West African States (ECOWAS) and the World Bank, to see how to forestall reoccurrence of the past incidence, adding that any amount of money spent on pipeline security is money well spent.

    He explained that the force majeure experienced during the period of the incident still has impact on its operation but expressed hope of returning operations to desirable level.

    He said: “I will bring my pipeline background, focus on safety in operations to bear on running the business. That is my intention that is the space where I would like to work. I think at this point of WAGPCo’s current status that is where we need to be.

    “We work on the aspect of pipeline security every day. We work with the natives of the four states to make sure that pipelines are patrolled. We work with the states to ensure also that vehicle traffic monitoring systems that will give us some increased visibility for ships that might be in the area are assured.

    “We have updated the out-most features to show the occurrence of the pipeline. We work the agencies including the ministry of energy to raise the visibility and awareness of pipeline security. We are planning a workshop with the states in the first quarter of this year to see what we can do as an enterprise between ECOWAS and the World Bank, the states and WAGPCo to do more work. I think money spent on pipeline security is money well spent.”

    On business transaction, he said because of the force majeure, there has been a fluctuation in volume currently done, which is in the neighbourhood of 70mmscfd to but intends to increase to the pipeline’s foundation volume of 134mmscf/d this year.

    He also noted that with the production of oil and gas in Ghana, the volume of business may increase because of independent power producers, people who want to use the pipeline to transport gas from one location to an off-taker that is in another location, and delivering of gas to states in the sub-region but this can only happen when the capacity is available. We will look at the opportunity you have just mentioned, he said.

    The pipeline was broken by a ship’s anchor in Togo on August 28, 2012 and the company declared force majeure on gas supply immediately, which was formally lifted on July 11, last year and WAPCo resumed gas transportation on July 12, last year.

    WAPCo is a joint venture between public and private sector companies from Nigeria, Benin, Togo and Ghana. It is owned by Chevron West African Gas Pipeline Limited (36.9 per cent); Nigerian National Petroleum Corporation (24.9 per cent); Shell Overseas Holdings Limited (17.9 per cent); and Takoradi Power Company Limited (16.3 per cent), Societe Togolaise de Gaz (two per cent) and Societe BenGaz S.A. (two per cent).

     

     

  • WAGPCo loses N26.6b to vandalised pipeline

    •Spends $40m on repairs

    West African Gas Pipeline Company (WAPCo) has lost N26.6billion revenue to the vandalism of its pipelines, it was learnt.

    The Managing Director of the company, Mr Charles Adeniji, who made this known in Lagos, also said over $40 million was spent on repairs of the vandalised pipeline.

    He said: “Repairs of the vandalised gas pipeline cost the company about $40 million, but we are yet to know the final figure because we are still computing the cost. We have completed repairs of the line and operation has commenced normally as at July 12, 2013. We have delivered gas to the sub-region in accordance to the gas transportation contract with our shipper.”

    The sub-regional pipeline, which traversed four West African countries, including Nigeria, Togo, Benin Republic and Ghana, was vandalised in August, last year at Lome, capital of Togo.

    Adeniyi lamented the huge revenue lost to the vandalism, which stalled operations, explaining that from August 28, 2012 to July 11, this year, when the company shut down, it lost about N26.6 billion.

    He said: “The company was shut down for 344 days; that is, 10 months and 14 days. During the period, we lost supply and services to our clients and on each day we didn’t work. We lost about$500,000. So, the number of days we didn’t work, multiply that by that amount, would give you the opportunity of knowing the money we have been denied because of the vandalised pipeline.”

    The WAPCo boss said that the gas pipeline, which was vandalised in August, last year, resumed gas transportation to their clients in July, last year – a year after the incident.

    The pipeline that was shut immediately it was cut into two at Lome, was severed by a ship’s anchor in Togo. To ensure that it was repaired to international standards, the owners of the company, including Chevron Nigeria Limited, hired experts to do the job and also followed industry procedures.

  • Shareholders applaud Lafarge Wapco

    Shareholders applaud Lafarge Wapco

    A deluge of encomiums has been poured on Lafarge WAPCO Plc by shareholders in appreciating the document recently released at the end of the 2012 financial year. They were full of praises for the board of directors and the management for the company’s performance and the outcome of the year’s financial result. According to the statement from the chairman: “Domestic demand for cement in 2012 was estimated at 18.3 million metric tons, up by approximately 7% on the estimated demand for 2011, this reflects a contraction in demand compared with the last five years where years on year growth in demand averaged approximately 10.8% . The lull in demand during 2012 was principally caused by an unusually prolonged rainy season which lasted into the fourth quarter of the year, a period of dry spell when construction activities were expected to pick up. The consequent flooding in most parts of the country as a result of the heavy rainfall also meant that construction activities by major contractors and private home builders were disrupted.

    “The Nigerian economy continues to offer tremendous opportunities but the capacity of manufacturers to harness the opportunities was constrained by the prevailing challenges of the operating environment. Economic activities were paralysed at the beginning of the year due to the nationwide civil unrest which only settled after an agreement with the Nigerian Labour Congress was reached for a partial removal of the subsidy. The partial removal of subsidy on petrol and increase in food prices as a result of flooding of farm land led to a spike in inflation rate which increased to 11.9% by the end of 2012 from 10.9% at the start of the year.”