Despite the harsh business operating environment in 2018, Dangote Sugar Refinery Plc has posted a resilient performance for the year.
2018 was quite a challenging year for the company with several negative activities, which include the influx of sugar smuggled into the key markets nationwide. Also, the Apapa traffic gridlock affected the evacuation of products from the refinery.
Economic activities in the country in the fourth quarter of 2018 was relatively weak, as a result of the continued liquidity squeeze , multi-year high unemployment rate, still-elevated inflationary pressures through the year coupled with the 2019 general election tension which weighed on private consumers.Dangote Sugar for the year ended December 31, 2018 achieved a group turnover of N150.4 billion, lower from N204.4 billion in 2017, a profit before tax of N34.6 billion and a profit after tax of N22 billion.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to N37.6 billion from N51.4 billion, while earnings per share stood at N1.85. Meanwhile, the board recommended and paid a total dividend of N13.2 billion, being N1.10 per share.
Speaking at the company’s 13th Annual General Meeting held recently in Lagos, shareholders commended the performance despite the harsh operating environment of the 2018 financial year.
National coordinator, Pragmatic Shareholders Association of Nigeria (PSAN), Mrs. Bisi Bakare said that though many quoted companies are struggling with the payment of dividends, Dangote Sugar Refinery is consistent in taking care of shareholders. According to her, investors are always happy when they receive returns on their investments both as dividend and share price growth on the Nigerian Stock Exchange.
Founder, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu in his remarks decried the negative impact of Apapa Wharf traffic situation, which has impacted negatively on the performance of companies as they struggle to move finished goods and raw materials to distributors and warehouses. He said that the board and management deserves a hefty pat on the back given the situation under which the achieved the result.
Speaking to shareholders, the chairman of Dangote Sugar, Aliko Dangote stated the resolve of the company to soar to greater heights and create more values for stakeholders despite the plethora of challenges in the economy. He said the company has posted a profit before tax of N34.6billion with a turnover of N150.4 billion for the 2018 financial year even as the company lamented continuous smuggling of sugar to the country.
Dangote said that the company was able to post an appreciable resilient performance despite the gloomy economic outlook at the dawn of the previous year 2017.
He noted that Dangote Sugar was able to weather through the economic downturn and advanced significantly in 2018 because it pursed aggressively its backward integration plan aggressively by focusing on issues that have been bogging down the plan and subsequently adjusting the timelines.
“2018 was quite a challenging year for the Company with several negative activities, which include influx of smuggled sugar into the key markets nationwide coupled with the Apapa traffick gridlock which continue to affect evacuation of products from the refinery,” Dangote stated.
The chairman explained that prior to the traffic logjam at Apapa, the company could move up to between 60 and 70 trucks out of the refinery but that since the problem started, it could hardly move up to 20 trucks out of the Sugar refinery daily.
Dangote stated that the company had to revise its backward integration timeline to mitigate against the unforeseen challenges noting that the first phase of the plan include the rehabilitation and expansion of the Savanna Sugar, the Lau/Tau project in Taraba state and the Tunga sugar project in Nasarawa state.
According to him, Savanna Sugar remains the only company producing sugar from sugarcane grown in the country and had just ended its 2018/2019 crop season. Rehabilitation of the land and its infrastructure for improved yield and output is still on-going.
Dangote disclosed that the first phase expansion of the Savanna Sugar capacity from the current 3,000TCD to 3,500TCD has been completed while the subsequent increase of production capacity to 6000TCD has commenced and is expected to be completed by 2020 as well as the installation of the new 12,000TCD factory that will be fed with the increased cane supply.
“At Tunga, activities are well underway at 68,000 hectares sugar projects site. Activities ongoing at the project site include the establishment of the cane seed nursery, housing and other basic infrastructure with the project currently employing 325 staff with potential for increase towards the fourth quarter of the year,” Dangote stated.
Looking into the future, Dangote said despite challenges, the company is committed to the medium and long term goals for the sugar for Nigeria project investing and growing the business in efficiently even with the cost optimization efficiency project on-going in the Apapa refinery.
Also, the chief operating officer of Dangota Sugar, Mr. Ravindra Singhvi stated that the key challenges during the year under review and currently remains the influx of lower quality, unlicensed sugar smuggled into the key markets nationwide, which continued to gain grounds with the attendant downward pressure on trade selling prices and the Apapa gridlock, affecting operations, primary and secondary distribution and consequently delivery to the customers.
Singhvi stated that “Guided by the board of directors, we have reviewed all our processes, realigned our teams for increased efficiency and currently implementing our energy saving/efficiency projects to maximize cost savings benefits, which are passed to customers to drive sales.”
He said that management’s short term focus remains sustaining the current market share and increasing it, in addition to improve efficiencies in every aspect of the company’s operations by cost saving drives, improved service levels and process optimization.
Dangote Sugar commenced business in March 2000 as the sugar division of Dangote Industries Limited. The sugar division was spun-off as Dangote Sugar Refinery via a scheme of arrangement in January 2006, which transferred all the assets, liabilities and undertakings attributable to the sugar division of Dangote Industries Limited to Dangote Sugar. The company refining facility in Apapa, Lagos State is one of the largest sugar refineries in the world with 1.44MT per annum installed capacity.