Nigeria remains investor-friendly despite security issues –Vandebeeck

Hello Friends!

The Chairman Presco Plc, Mr. Pierre Vandebeeck, tells Udeme Ekwere that despite inherent security challenges, the Nigerian business environment is still safe and remains an investor’s delight

Despite all the cry of insecurity and related challenges in the country, some investors like you still believe in the Nigerian economy, what has been attracting you to the country?

For me, if you want to be in Africa, you have to be in Nigeria. First of all, Nigeria is fast developing; the Gross Domestic Product growth of six to seven per cent per annum is almost near to the Asian Tigers some years ago; governance is also improving.

It is not yet perfect but improving. And the power of Nigeria lies in its market. Today, you have about a 160m people and tomorrow, maybe about 250m or more. Nigerians are hard working people, contrary to what most people all over the world think about them.

They are loyal and therefore I have always believed that Nigeria is the place to be. And I believe today more than ever before, that is why I keep on investing. You know that in Nigeria, we are investing about N3bn annually. Now, we are growing faster and faster.

Nigeria is an investor-friendly country and legislations are ok. If you can stay away as far as you can from politics and you cooperate with government, you do your Corporate Social Responsibility properly, you will have no problem both with the government and with your neighbours.

That is why I feel that our investments are safe in Nigeria. I must say that over the past 10 years, I have discovered the virtues of Nigeria. I have also been to Ghana, Ivory Coast, Gabon, Cambodia, and other places, I have come to the conclusion that you have to be in Nigeria, because this is the place where you can make money and that is the place where you can grow and have an impact.

That is why only last year, we decided to go for something in the riverine areas, which has now translated into reality by the acquisition of Rison Palm. I said, “Let us go to Cross River State and do some other thing,” now we have three business units which will materialise in time to come.

If God permits me, I will have close to a 100,000 hectares of oil palm, 30,000 people working for us and the whole companies listed on the Nigerian Stock Exchange. I think that the Initial Public Offer of Presco Plc started on a bright note and the shares are doing fine. We have about 10,000 shareholders in Presco, and we have no problems with anybody because we respect our communities, we do things for them and that is why they have faith in us. I believe in Nigeria.

We want to know what shareholders should be expecting from this company in years to come.

So far, we are very proud of what we have achieved and it is now almost exponential. Every plantation business, you must plant, we have been planting every year in more and more places. This year, we want to plant 1500 hectares. We started with 200 ha, 400 ha, 800ha per annum etc. Until we get to 1500 ha. In the foreseeable future, we would plant in our Sakponba Plantation and the Ologbo Estate, where more planting is currently going on.

We would continue to plant at the rate of 2000 hectares per annum, and this, we know, will increase our market yield. There are also massive expansions in the factory; the refinery capacity has been doubled and we shall increase it further, but from now, we have to double the capacity again.

By December last year, we had N8.5bn; and the projection for this year is about N 10bn. I can bet with anybody that by 2013, we would be hitting N15bn and in 10 years from now, we would be pushing towards N50bn annual turnover.

If we continue to manage our business well, our merchants are good; our dividend policy is worth the risk. If we continue to put 50 per cent of our profit back into the business for investment, we are doing well. This year, we are paying out N1bn; next year we are going to pay N1.5bn probably, etc. Anyone who has taken on shares in Presco has nothing to complain because the returns have been consistent and the shares are growing every year. Our shareholders are well off because our stock exchange value is good and I can tell you that Presco shares are still undervalued at N15 plus right now. It is worth about N20 if you ask me.

A look at the growth pattern of our company in the last five financial years, 2007-2011, showed that the company’s annual turnover has been steady. In 2007, the company recorded N2.2bn and profit after tax of N37.2m. Five years later, we recorded a turnover of N8.5bn and profit after tax of N1.6bn.

We are satisfied with the trend and are sure that this would continue in the foreseeable future. The growth pattern will continue to be steady and that returns on investment will also grow in the same direction

Sometime back, you said that land and human capital remained the greatest challenges to the growth of business in Nigeria; do you still maintain this?

It is absolutely still a challenge for businesses like us. For instance, to achieve the full capacity of Presco, we still need to acquire some 4000-5000 hectares, we need 20,000 hectares all round for oil palm to be able to achieve full production as we are doing today at full capacity.

Because if you know that in two to three years, we have to start felling trees yearly and we have to keep our factories in full capacity. So on the other hand, we are planting a thousand hectares of oil palm now and we will continue to plant a thousand at least per year to maintain our production potential at full capacity of about 200,000 tonnes of fruits.

We shall continue to build on this. Rubber is a different thing: we are just going into that in this country but we need a concession here, and at Sakponba. There are still opportunities to acquire and our ultimate plan is for Presco to have 20,000 hectares of oil palm 10 years from now. So land is still an issue. But presently, the most pressing need is not land but manpower. Yet, it is good to have land for the future because tomorrow, it will no longer be there. But the most urgent challenge is quality people, human resource.

Speaking of the SIAT Group, which is also one of your companies, we learnt of the the entry of some Chinese investors into the business. What would this do for the company?

Yes, for two years I have been negotiating for the exit of Ernest Oppenheimer and Son, the South African investor in the company; when it became clear that they do not share our overall views, as a result of which we entered into negotiations and bought them out.

They were holding 27 per cent of the group. After that was done, my family holdings became 87 per cent of the entire group and we decided that it might be better to reduce the shareholding of my family, and that it might be better to look for another strategic investor, who shares the vision of the group.

And so, we found the Chinese group, Sinochem, which is also a big business empire. They have an annual turnover of $500m and they have a reliable investment platform in Singapore called GMG, which already has other activities in Africa. And So, this firm is bringing investment funds into the group, which will enable us expand faster and buy up new companies. That is the objective.

Culled from The Punch.

xoxo
Simply Cheska...