Dangote Sugar Refinery Starts Year with Strong Earnings

The Dangote Sugar Refinery Plc began its fiscal year 2023 with a strong performance in its first quarter (Q1), demonstrating growth while maintaining its position as the industry’s undisputed leader.

Following an increase in gross margin by 458 basis points year-on-year, the company’s quarterly unaudited financials for the first quarter of 2023, which were released on the Nigerian Exchange Limited, revealed a profit after tax growth of 44.3 percent year-on-year with earnings per share of N1.05 as compared to N0.73 in the first quarter of 2022.

Increases in revenue across all of Dangote Sugar’s product lines contributed to the company’s 8.2% year-on-year revenue growth in the first quarter of 2023.

The difference between the increase in revenue and the increase in the cost of sales resulted in an increase in the gross margin to 25.2%. Consequently, EBITDA margins increased by 407 basis points and EBIT margins increased by 437 basis points to reach 24.7 and 22.4 percent respectively in the quarter, despite an increase of 16.8 percentage points in operating expenses.

Net finance costs increased by 103.2% year-on-year during the quarter as a result of a 129.9% year-on-year increase in finance costs in Q1, 2023, which rose to N8.06 billion from N3.51 billion in Q1, 2022. This increase occurred in conjunction with a 218.5% year-on-year growth in finance income.

The overall profit before taxes in the first quarter of 2023 was N18.53 billion, representing an increase of 36.3% year-on-year. The cost of taxes in the first quarter of 2023 was N5.73 billion, which resulted in a profit after taxes of N12.80 billion, an increase of 44.3 percent.

According to Cordros Securities Limited, Dangote Sugar’s performance in the first quarter of 2023 came in as expected, with significant growth in profitability during the period. According to the information provided in our full-year update for 2022, we are keeping our expectations that the favourable demographics for sugar consumption will continue to be positive for Dangote Sugar’s performance.

Aliko Dangote, chairman of Dangote Sugar, made these remarks at the company’s Annual General Meeting: “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 do our part in ensuring that Nigeria becomes self-sufficient in sugar within a very short period of time by ensuring that we produce enough sugar for our own consumption. Although we are not the only players involved, you can count on us to play our part. We should be able to produce more than 170,000 tonnes, which would be the highest amount produced locally in Nigeria’s entire history by a significant margin.

He made a commitment that the management would continue to implement strategic actions to maintain performance with the support of all stakeholders and in complete adherence to the tenets of the Sugar Master Plan that was developed by the federal government.

Dangote stated that a portion of Dangote Sugar’s success could be attributed to the management’s continued implementation of the Dangote Sugar Development Master Plan. This included the rehabilitation and upgrade of the Dangote Sugar Refinery’s Numan operations, facilities, and land development. In addition, Dangote stated that the development of the Nasarawa Sugar Company Limited, the greenfield sugar project, and Tunga in Nasarawa State were all part of the plan.

Dangote further stated that the first phase of the Sugar Master Plan implementation period came to an end during the year under review and that the federal government approved the second phase over the next 10 years, saying that this extension came on the back of the review of the first phase by the National Sugar Development Council and other government parastatals, taking cognizance of the challenges and several circumstances that were unforeseen which riddled the first phase of tumult. Dangote also stated that the federal government approved the second phase over the next

Ravindra Singhvi, the Group Managing Director and Chief Executive Officer of Dangote Sugar Refinery stated that “implementation of the Sugar Projects initiatives continued at a high tempo despite the challenges.” 

However, we were able to maintain our victories by maintaining a peaceful environment with the communities and by maintaining a positive engagement with state and community stakeholders, as shown by the fact that they continued to support the DSR Backward Integrations Project.

“The situation with 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,” said the company.

 “The Dangote Sugar Refinery is located in Tunga.”

He said 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,” and he added that “the Board and Management remain resolute and committed to ensuring a sustainable future for the business with the Dangote Sugar Master Plan.” He said that “steady progress is now being made as the Company continues the rehabilitation and expansion project at Dangote Sugar, Numan,” and that ”

When asked about the company’s outlook for the future, the CEO responded as follows: “we will continue to strategically position our brand, optimise our processes and cost efficiency, and implement our strategic initiatives, including the Sugar for Nigeria Backward Integration Project Master Plan.”

“This has been pursued with rigour, and the realization of the targets will ensure the growth of Dangote Sugar into an integrated sugar production business and a sustainable future for the business,” says the company.

Also, the Group chief finance officer of Dangote Sugar Refinery, Oscar Mbeche, stated that “in 2022, the company recorded another impressive year of financial performance and achieved growth over 2021 financial performance.” 

Oscar Mbeche said this. The increase in revenue in 2022 was 46 percent higher than in 2021, going from N276.1 billion to N403.2 billion. This was due to the fact that sales volume increased by 10 percent while prices also increased.

“The company continued to grow its supply chain footprint in Nigeria, which was complimented by excellent customer care that maintained customer loyalty, which in turn sustained the company’s revenue growth.” 

The provision of high-quality sugar to the company’s clients continues to be the primary concentration of the business.

Mbeche explained that DSR has continued to support the development of the Nigerian Sugar Master Plan and that DSR’s backward integration (BIP) Numan operations saw the highest volumes of sugar processed since the inception of the company, increasing by 64 percent over 2021 volume. This was stated in reference to the performance of the Nigeria Sugar Master Plan and the BIP.

He did note, however, that a number of significant obstacles must still be conquered. These include, among other things, the difficulties of securing funds to import capital assets to support BIP development plans and inadequate infrastructure. He noted that all of these factors have a negative impact on the rate at which DSR can achieve further financial and performance efficiencies in the BIP operations.

With its production of Vitamin A Fortified and non-fortified refined granulated free flowing crystal white sugar, 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, Dangote Sugar controls more than 60 percent of the local market share.