Nigeria’s largest sugar refinery, Dangote Sugar Refinery Plc, has recorded a well-rounded performance in the first half (H1) of the year ended June 30, 2022 with considerable growths in sales and profit.
The Company’s H1 results revealed sturdy revenue growth and operating efficiency. The robust top-line primarily reflected the impact of higher-than-expected volume outturn and pricing.
Specifically, the company recorded a 40.5 per cent and 60.6 per cent surge in revenue and profit after tax to N91.0 billion and N11.3 billion, outpacing analysts’ projections.
Review of the results indicated that profit after tax (PAT) rose by N7.63 billion to N20.24 billion in contrast to N12.61 billion in the 2021 half year. Revenue was up by N53.51 billion, increasing to N185.46 billion compared to N131.95 billion at the same period last year. Gross profit maintained the same upswing, rising from N28.60 billion to N38.82 billion.
Further information from its H1 results revealed that Dangote Sugar increased its area for growing canes by 685.1 hectares between full year 2021 and H1, 2022.
This effort is in line with the company’s plan to improve local sourcing to arrest passthrough from volatile global sugar prices and domestic FX crises. Investments along these lines may have also informed the cumulative increase in deposit for shares between 2020 and 2022.
Analysts stated that these backward integration efforts will likely support earnings in the medium to long term.
Cordros Securities Limited said “Dangote Sugar’s Q2, 2022 performance beat our expectations as we expected FX illiquidity, inflationary pressures and structural inefficiencies would inhibit margins and drag earnings.
“We like that the company could withstand the constraints mentioned above and put out a strong performance. Considering the resilience shown in the first half of the year, we are more optimistic about Dangote Sugar’s performance for 2022 full year.”
Group managing director, Dangote Sugar Refinery Plc, Ravindra Singhvi in his remarks attributed the positive results in the half year to key trade interventions introduced during the year and positive market responses.
He said, “Our impressive performance in the half year demonstrates our resilience in the face of prevalent challenges, which rightly reflected in strong topline growth shown in the financial results.”
Recently, at the Company 16th Annual General Meeting (AGM) in Lagos, the chairman of the Company, Aliko Dangote, said the goal of Dangote Sugar Backward Integration Projects Master plan remains the achievement of 1.5 million MT annually from locally grown sugarcane in support of the quest for sugar sufficiency in the country by the federal government of Nigeria.
He stated that this will be achieved in addition to the extended value chain benefits that will be derived from the projects including thousands of jobs that will be generated in the sector from these projects.
He however said “In spite of the challenges faced, Dangote Sugar Numan Operations rehabilitation and expansion efforts of the factory and field are advancing. The community issues that came up were effectively managed, and we have continued to advance so far without any major disruptions. Our Stakeholder Management teams across the Group are leading our corporate efforts and relationship between the Company and host communities remains cordial.
“As a result, the factory upgrade to 3,800TCD completed in 2020, is now being upgraded with an additional 6,000TCD, which is at an advanced stage. This will bring the total installed factory capacity at the Numan operations to 9,800TCD in readiness for processing of sugarcane from the sugar estate farms that are being newly developed.”
He assured of the company’s commitment to the achievement of Sugar Backward integration projects, which is the future of the industry in Nigeria, saying this will keep us on our sustained growth path and we will continue to deliver and improve our quality service while delivering value to all stakeholders.
Dangote Sugar Refinery has continued to implement its sugar backward integration projects plans and the enhancement of its Outgrowers Scheme to support the economic growth of the immediate communities. The aim is to develop a robust outgrower scheme with about 5,000 outgrowers when the projects have fully taken off, in addition to the achievement of other targets of its Sugar for Nigeria Project plan.
The key focus is of the sugar refiner is achievement of the Dangote Sugar Backward Integration Projects targets and put Nigeria on the path of sugar self-sufficiency and the world sugar map.
Employee Health & Safety as well as that of its partners remains a top priority at the company’s operations at the Apapa Refinery, its Sugar Backward Integration Operations in Numan, Adamawa State and Tunga, Nasarawa State. All processes are in compliance with stipulated health and safety protocols.
Dangote Sugar Refinery is Nigeria’s largest producer of household and commercial sugar with 1.44M MT refining capacity at the same location, refines raw sugar imported from Brazil to white, Vitamin A fortified refined granulated white sugar suitable for household and industrial uses.
Its Backward Integration goal is to become a global force in sugar production, by producing 1.5M MT/PA of refined sugar from locally grown sugar cane for the domestic and export markets.
To achieve this, Dangote Sugar Refinery Plc acquired DSR Numan Operations (Savannah Sugar Company Limited), located in Numan, Adamawa State in December 2012, and embarked on the ongoing rehabilitation of its facilities and expansion of its 32,000 hectares’ sugarcane estate.
In September 2020, the scheme of merger between DSR and Savannah Sugar Company Limited was completed which gave birth to a bigger and stronger business with considerable opportunity for growth and delivery of superior benefits to all stakeholders. The expansion of the Numan sugar estate is still ongoing as well as the development of the greenfield site acquired at Tunga, Nasarawa State for the achievement of DSR’s sugar for Nigeria development master plan.