Having spent about eight months in Nigeria as the Chief Executive Officer of Lafarge Africa Plc, Mr. Michel Puchercos, speaks with Eromosele Abiodun about his engagement with Lafarge, business and the cement manufacturing environment as well as the Nigerian economy
In the short time you have stayed, what can you say about Nigeria?
Nigeria cement market is dynamic and has great potential for continued growth, despite the current economic challenges. The huge market and population, level of infrastructural development, and massive desire for housing are positive indicators.
Focus on infrastructure development by current government is quite encouraging. The people are warm and committed. Hence, there is great focus and high expectations from the LafargeHolcim Group.
Please elaborate on LafargeHolcim’s commitment to continue to do business in Nigeria despite the challenges?
It is a known fact that we have been in business in Nigeria for over five decades now. Following the backward integration policy of the government, our operations grew from 3 million tonnes in 2008 to 8.5 million tonnes capacity in 2012, with investment of over 1 billion euros.
Further investment of over $565 million is currently being made in the additional 2.5 million tonnes capacity cement plant in Mfamosing, Calabar, Cross River State. The plant will be officially commissioned soon.
With this, we have a combined capacity of 10.5 million metric tons of cement from our operations in Ashaka Cement (Gombe State), UniCem in Cross River State, WAPCO operations in Ogun state and Atlas Cement in Rivers State.
We have announced plans and performed a Ground Breaking Ceremony for a 2.5 million tonne-expansion in plant capacity at Ashaka. In addition, we are constructing an N11 billion Captive Power plant also at Ashaka, Gombe State.
We are the leading ready-mix concrete producer through our Lafarge Ready-mix Nigeria operations in Lagos, Ewekoro, Abuja, and Port-Harcourt, with plan to spread to other states of Nigeria in the near future to contribute innovative solutions to the building and construction industries. Outside the Oil & Gas and Telecommunications industries, LafargeHolcim is the largest foreign investor in Nigeria.
How would you assess Lafarge Africa in 2016?
No doubt, 2016 has been a challenging year, not just for Lafarge Africa, but for all businesses in Nigeria, for obvious reasons. For us, the reasons are mostly external – gas supply, logistics challenges due to the nature of our of roads, lack of spare parts, increase in fuel costs, little or low access to explosives as well as foreign exchange, inflation and devaluation.
Despite the external challenges this year, we have had a very positive, very promising and better cost performance improvement compared to last year. We look forward to improvements in these areas for the rest of the year.
What projections do you have for Lafarge in 2017?
We are quite optimistic that all the indices will get better in 2017, and there will be overall improved performance.
How do you access doing business in the Nigerian environment?
This is a very complex environment and more than complex, it is also a very promising environment. With our locations in the North, South-south, South-east and South-west, we are in very promising regions.
There is Ashaka in the North and government wants to develop the North-east where we have a plant. In South-west , we have double capacity and ready to grab all opportunities of development. For me, we have efficient plants well located and in all these regions and we have potentials which, of course, is hidden by the 2016 recession and foreign exchange.
For the time being, we are coping with this situation. Of course, if it becomes national drama, we would most likely be impacted as well but we are still managing, we have improved everywhere we needed to improve and the Q4 results would show it. We are just getting ready to grab the wonderful opportunity Nigeria offered us and will offer us for sure. No doubt, in infrastructure, housing, and roads, there are needs everywhere.
A big input cost for cement manufacturers is energy and power. How has your company been coping with the issue of energy and power supply in Nigeria?
Supply availability and cost of energy (fuel and electric power) have been major issues for cement manufacturers in Nigeria over time. Over the years, we have invested on projects that guarantee fuel flexibility in all our operations.
Apart from the consideration of economics, the use of natural gas as our main energy source has turned out to be effective in the goal to reduce the carbon footprint of our industrial process, compared to other fossil fuel. Alternative sources of energy (biomass, industrial waste, municipal waste, tyres, and coal). We have a 310MW Power Project (of which 90MW is already completed) in Ewekoro, as our contribution to the current power generation in Nigeria.
A good number of companies have been reporting negative results in recent time due to the economic downturn. Now that you are here, what do you intend to do to improve the company’s books and meet shareholders’ objectives?
For me, it is simply by motivating the team for improved performance, by being anticipatory, and by making the right investments within available budget. We also need to be mindful of our costs and avoid ‘business as usual’. Our NGN loan has been refinanced at a cheaper rate, while we are currently restructuring the USD loan.
The delisting of Ashakacem is currently been concluded. Could this be as a result of the economic recession?
The delisting of AshakaCem is a transaction initiated by its Board of Directors. It is not due to current economic recession, which we believe is a passing phase. Recent evolution of the shareholding of AshakaCem has meant that today, the free float (tradable shares) of the Company on the Nigerian Stock Exchange (NSE) is below the minimum threshold permissible. Minimum Free Float permissible by the NSE Listing rule is 20 per cent, Ashaka currently has 15.03 per cent. The directors of the company decided to be proactive to launch a voluntary delisting rather wait for a regulatory delisting.
The media was recently awash with news of your recent SERAS Awards and the National Literacy Competition. What is the motivation behind your organisation’s corporate social responsibility?
Our corporate social responsibility is neither philanthropic nor ad-hoc, but intrinsic to our business strategy with focus on our 2030 Plan, stakeholder management, community development, national CSR projects, volunteering, donations, and sponsorships. Lafarge Africa’s Social investment for its host communities is needs-based, strategic, and highly sustainable.
Our CSR approach recognises the host communities as strategic partners to whom we accord mutual respect, believing that our footprints should, in its overall assessment, be a blessing to our neighbours.
Lafarge Africa continually makes investments woven around health and safety, economic empowerment, education, shelter and community support as a good corporate citizen. Our track records speak volume with several notable awards to show for them.
How much of your raw materials are sourced locally?
I can tell you limestone is sourced here one hundred per cent and it is the number one raw material. I mentioned local coal earlier. Iron-ore comes locally already. Honestly, everything we can source locally, we do. As for remains and spare-parts, sadly there are no skills in cement industry in Nigeria, so most of the spare parts come from abroad. There are some talents, when we need to recruit people, which I don’t know if it can be equated to raw materials. But everything that needs to be sourced locally is sourced locally.
With issues of foreign exchange in Nigeria, what solutions are being proffered to cushion this effect?
How do you manage risks in safety? The best solution is to eliminate the risks. In this case, how do you eliminate the risk? It is by buying more Naira rather than Dollar. We find ways of reducing the risks by removing the US dollar suppliers and putting naira suppliers, and having people pay in naira. So this is our strategy.
Another way is to export, because if that is done, we would have access to US dollar and it would help us. So we are exploring all these avenues and eliminating the risks.
Who is Michel Puchercos and what experience are you bringing into Lafarge Africa and to Nigeria?
My name is Michel Puchercos. I am a French National. I am an Engineer by training, and a graduate of EcolePolytechnique and the National School of Rural Engineering, Waterways & Forests in France. I have worked in South Korea, Kenya, Uganda, Tanzania, and France. I speak various languages including French, English, Korean, Spanish and Swahili.
In the course of my career, I have had extensive operational and strategic experience both at Junior and Senior levels with small and medium organisations, cooperatives and multinationals organisations. I have worked in the French Ministry of Agriculture and later as General Manager and Executive Vice President in the Biochemistry and Food industry before joining the legacy Lafarge.
I came into Lafarge as Head, Strategy and Purchasing in Orsan, Lafarge Biochemistry and in 1998 became Director of Cement Strategy and Information Systems, Lafarge Gypsum. In 2003, I became the Director of Cement strategy, Lafarge Group in France. I moved into cement operations in 2005 as the CEO for Lafarge operations in Kenya and Uganda while doubling as the Chairman of Tanzania operations.
After four years in Sub-Saharan Africa, I moved to Asia as the President and CEO of Lafarge South Korea, where I remained for seven years. I came into Nigeria as Country CEO for Lafarge Africa Plc in April, this year.