Dangote Sugar Refinery Plc has started its financial year 2023 with a strong performance in its first quarter (Q1), showing improvement and maintaining its leadership position in the industry.
The company’s Q1, 2023 unaudited financials released on the Nigerian Exchange Limited revealed a profit after tax growth of 44.3 per cent year-on-year with an earnings per share of N1.05 as against N0.73 in Q1, 2022, following an expansion in gross margin of 458bps year-on-year.
Dangote Sugar’s revenue grew by 8.2 per cent year-on-year in Q1, 2023, supported by increases across its product lines.
Gross margin increased to 25.2 per cent, as revenue grew faster than cost of sales. Consequently, EBITDA (+407bps) and EBIT (+437bps) margins expanded to 24.7 per cent and 22.4 per cent in the quarter respectively, amid a 16.8 per cent increase in operating expenses.
Net finance costs (+103.2% year-on-year) surged in the quarter, owing to a 129.9 per cent year-on-year increase in finance costs in Q1, 2023 to N8.06 billion from N3.51 billion in Q1, 2022, amid a 218.5 per cent year-on-year growth in finance income.
Overall, pre-tax profit was higher by 36.3 per cent year-on-year to N18.53 billion in Q1, 2023. Following a tax expense of N5.73 billion, profit after tax grew by 44.3 per cent to N12.80 billion in Q1, 2023.
Cordros Securities Limited said: “Dangote Sugar’s performance in Q1, 2023 came in as expected with profitability growing significantly in the period. As stated in our 2022 full year update, we maintain our expectations that the favourable demographics for sugar consumption will remain positive for Dangote Sugar’s performance.”
Speaking at its Annual General Meeting, chairman of the Dangote Sugar, Aliko Dangote said: “the shareholders are very happy with the way we have been running their company and also in re-investing the profit into the Backward Integration Programme (BIP) for the sugar industry.
“We are going to play our part in ensuring that Nigeria becomes self-sufficient in sugar within a very short period. We are not the only players, but we will surely play our part. We should be able to produce over 170,000 tonnes which are by far, in the history of Nigeria, the highest to be produced locally.”
He pledged that the management would continue to implement strategic actions to sustain the performance with the support of all stakeholders with complete adherence to the tenets of the federal government’s Sugar Master Plan.
Dangote said part of the success recorded by Dangote Sugar was made possible by the management’s continued implementation of the Dangote Sugar Development Master Plan with the rehabilitation and upgrade of the Dangote Sugar Refinery’s Numan operations, facilities and land development, as well as the development of the Nasarawa Sugar Company Limited, the greenfield sugar project, and Tunga in Nasarawa State.
Dangote further said, during the year under review, the first phase of the Sugar Master Plan implementation period came to an end and that the federal government approved the second phase over the next 10 years, saying, this extension came on the back of the review of the first phase by the National Sugar Development Council and other government parastatals with cognisance of the challenges and several circumstances that were unforeseen which riddled the first phase of the programme.
Group managing director/CEO of Dangote Sugar Refinery, Ravindra Singhvi said: “implementation of the Sugar Projects initiatives continued at a high tempo despite the challenges. However, we sustained our wins with the continued existence of peaceful environment with the communities and the continued positive engagement with the state and community stakeholders evidenced in their continued support of the DSR Backward Integrations Project.
“The situation of the Lau/Tau project is still the same, and we are hopeful that the Taraba State Government will resolve the community issues, focus on the development, rehabilitation and upgrade of our facilities at the Dangote Sugar Refinery, Numan Operations and the Nasarawa Sugar Company Limited, Tunga.”
He stated that, “steady progress is now being made as the Company continues the rehabilitation and expansion project at Dangote Sugar, Numan, and development activities at the Nasarawa Sugar Company Limited, Tunga, saying that the Board and Management remains resolute and committed to ensuring a sustainable future for the business with the Dangote Sugar Master Plan.
On future outlook, the CEO said: “we will continue to position our brand strategically, optimise our processes and cost efficiency and implementation of our strategic initiatives; the Sugar for Nigeria Backward Integration Project Master Plan.
“This is been pursued with rigour, and the realisation of the targets will ensure the growth of Dangote Sugar into an integrated sugar production business and a sustainable future for the business.”
Also, Group chief finance officer of Dangote Sugar Refinery, Oscar Mbeche said that “in 2022, the company recorded another impressive year of financial performance and achieved growth over 2021 financial performance. Sales volume grew by 10 per cent complimented by higher prices, contributed to revenue growth in 2022 by 46 per cent from N276.1 billion to N403.2 billion.
“The company continued to grow its supply chain footprint in Nigeria complimented by excellent customer care that sustained customer loyalty to sustain the revenue growth. The company’s primary focus remains adding value to its customers with high quality sugar.”
On Nigeria Sugar Master Plan and BIP performance, Mbeche explained that DSR’s continued to support the development of the Nigerian Sugar Master Plan, DSR’s backward integration (BIP) Numan operations saw the highest volumes of sugar processed since the inception of the company, increasing by 64 per cent over 2021 volume.
He however said significant impediments still need to be overcome, principally, the challenges of securing funds to import capital assets to support BIP development plans, poor infrastructure, among others, saying that these negatively impact the pace at which DSR can achieve further financial and performance efficiencies in the BIP operations.
Dangote Sugar controls more than 60 per cent of the local market share with its Vitamin A Fortified and non-fortified refined granulated free flowing crystal white sugar production, packaged and distributed in 1000kg, 50kg bags, 1kg, 500g and 250g; sold under the brand name ‘Dangote Sugar’ sold to consumers and industrial markets nationwide.
