CIE: Utilities

THE COMPANY: Compagnie Ivoirienne d'Electricité (CIE) is a leading utilities company in West Africa. Created in August 1990 by the French group Bouygues and the electricity company EDF, CIE is a private Ivoirian company that holds a public service concession for the production, transportation, export, import, distribution and marketing of electricity. After an initial period of collaboration from 1990 to 2005, the state of Côte d’Ivoire and the CIE renewed their partnership for another 15 years, running from 2005 until 2020.

Finagestion, the majority shareholder with 54%, is a holding company created in 2003 and based in France. The company is 60% owned by Emerging Capital Partners (ECP), an Africa-focused investment fund, with $1.8bn assets under management. CIE’s second-largest shareholder is the Ivoirian state, with a 15% stake. The Ivoirian electricity sector, with an installed capacity of 1390 MW, is divided into five hydroelectric units representing 26% of the electricity production and five thermal centrals representing 74% of the electricity production.

Only one third of the Ivoirian territory is electrified. The country is highly dependent on natural gas (70%). Only 25% of the Ivoirian population has access to electricity and the average cut time is 46 hours in 2012 against 14 hours in 2000. Electricity shortages and issues faced are due to the lack of investments in the sector the last 10 years in the context of political instability in Côte d’Ivoire.

Ageing infrastructures, obsolete equipment, and problems with vandalism and fraud have negatively affected the sector. However, by 2017 Côte d’Ivoire should have an installed production capacity of 2367 MW, thanks to the government’s infrastructure restructuring programme.

Over the past 12 months, the stock price has rise by twofold to reach CFA45,000 (€67.5), thanks to good annual results and the 7% dividend yield paid to shareholders. However, with a beta of 1.03, CIE CIE’s shares are considered relatively risky for the regional bourse.

The company’s turnover showed a 22% rise to stand at CFA24.6bn (€36.9m), thanks to the increase in quantities invoiced, with a 16% rise in national demand, the resumption of billing in the ex-rebel zone and the increasing rates for high voltage (+10%).

As for profitability, the EBITDA margin decreased from 7% in 2011 to 5% in 2012 due to a significant increase in overhead costs by 36.89%, especially maintenance and repair costs, which were up 85.59% compared to the previous year.

We note that CIE has suffered from vandalism and theft, which explains the firm’s higher costs. CIE’s 10-year average dividend payout ratio is 101%, and according to the company’s management, the generous dividend policy should remain consistent over the next few years.

DEVELOPMENT STRATEGY: The company aims at: • Being the leader of energy distribution in the sub-region.

• Improving profitability by increasing the distribution ratio from 77% to 80% in 2013.

• Improving sales by fighting against fraud and illicit networks. For that purpose, a distribution system for lower-income people and less-favoured areas funded by the Ivoirian government and the World Bank was created.

• Improving the company’s image thanks to a broad communication campaign to fight against customers’ disaffection due to electricity shortages.

• Increase customer satisfaction through marketing efforts with the launching of new means of bill payment via mobile banking (Orange Money, Easy Collect).

• Continuing to emphasise sustainable development and corporate responsibility for the sector through efforts to achieve water and energy savings, and by seeking to reduce greenhouse gases, discharges and water pollution.