Auto, cement, FMCG industries key drivers in 2014

Auto, cement, FMCG industries key drivers in 2014

Posted by Sylvester on Monday, December 29, 2014 0

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Nigeria’s manufacturing sector recorded what may be described as robust performance in the outgoing year. Key reasons for this virile performance included slight policy focus on the sector and increased advocacy roles of the Manufacturers Association of Nigeria (MAN), chambers of commerce, as well as experts.

Consistent pratfalls of oil prices in the international market also exposed the weaknesses of the manufacturing sector and underscored the need for economic diversification through manufacturing and other real sector areas.
Key sub-sectors that drove the sector during 2014 included automotive and cement industries, as well as the fast-moving consumer goods (FMCGs) sub-sector, where food, beverages, sugar and personal care played significant roles.
During the year, full implementation of the automotive policy, initiated by the Federal Government, attracted 21 companies who signed commitments with technical partners to set up assembly operations with product lines for cars and sport utility vehicles (SUVs), pick-up trucks, mini-buses, buses, as well as trucks.

Peugeot Automobiles of Nigeria (PAN), Innoson Vehicle Manufacturers and VON Nigeria had new leases of life, as PAN resumed assembly of Peugeot cars in July while VON also started assembly of Nissan and Hyundai vehicles.
Dana Motors signed technical partnership agreements with Kia and Renault for a semi-knocked-down (SKD) assembly plant, while Kewalram Chanrai Group began discussions and feasibility studies to convert a former textile industry in Isolo to an SKD assembly plant.
Also, Coscharis Motors acquired several acres of land at Lekki, Lagos, for the building of Joylong brand of cars and mini-buses, with feasibility studies ongoing.

Moreover, the cement industry recorded a number of activities within the year. Dangote Cement ramped up its capacity to 29 million metric tons per annum (MT), from 20 million MT. The company also introduced 3X cement brand as well as 32.5 and 52.5 grades.African businesses to form Lafarge Africa. It appointed Guillaume Roux as its chief executive officer. The business deal saw the second largest cement maker ramp up capacity to 8.5 million MT, 4.5 million MT from Wapco and 4 million MT from the South African business. This does not include 2.5 million MT capacity of the United Cement Company of Nigeria (UniCem) and 1 million MT of Ashaka Cement. UniCem will achieve 5 million MT by 2016, while Ashaka anticipates to have 4 million capacity soon.
“The intended Lafarge Wapco/Lafarge Africa consolidation, with a unified management across four businesses in Nigeria, is much better positioned to deliver growth than Lafarge Wapco as a stand-alone company,’’ says CSL Equities, economic and market research firm, in its June report on the combination, which included Wapco, South African business, UniCem and Ashaka Cement.

Within the year, Bua Group announced investment of over $500 million in a green-field cement plant at Okpella, Edo State, to add additional 3 million tons per annum to the Nigerian cement market by February 2015.
Recall that Bua Group recently bought shares in Edo Cement Company Limited, maker of Rhino Cement, which was producing 300,000MT per annum.

Just like cement, which was propelled by the backward integration policy, the sugar industry reported huge positives as investors pledged to pump $2.6 billion into the sub-sector. Dangote Sugar has been pumping about $2 billion investments in six states in the country, through its recently acquired Savannah Sugar in Numan, Adamawa State. HoneyGold Group has also been investing $300 million on two sites in Adamawa State, while Crystal Sugar Mills invested $30 million to expand its operations to produce 60,000 tons of sugar/annum from its acquired 1,500 TCD sugar plant at Hadejia, Jigawa State.

Again, Confluence Sugar Company has been investing $240 million in Kogi State. Furthermore, Dangote Sugar Refinery, Flour Mills of Nigeria plc, McNichols Consolidated plc, Lucke Sugar, and Dogan Sugar also expanded their packaged sugar manufacturing facilities in Nigeria, according to Latif Busari, executive secretary, National Sugar Development Council (NSDC).

Unilever, maker of personal care products, had its investments reach $200 million within the year. Procter & Gamble, another leader in the industry, set up a $300 million plant at Agbara, Ogun State. There were also various investments by food and beverage firms such as International Breweries and Guinness, among others.