Dangote Sugar Refinery Plc began its fiscal year 2023 with a strong performance in the first quarter (Q1), demonstrating improvement and maintaining its industry leadership position.
The company’s unaudited financials for the first quarter of 2023, released on the Nigerian Exchange Limited, revealed a 44.3 percent year-on-year increase in profit after tax, with earnings per share of N1.05 compared to N0.73 in the first quarter of 2022, thanks to a 458 basis point increase in gross margin.
Dangote Sugar’s revenue increased by 8.2 percent year on year in the first quarter of 2023, owing to increases across all product lines.
As revenue grew faster than the cost of sales, the gross margin increased to 25.2%. As a result, EBITDA (+407bps) and EBIT (+437bps) margins increased to 24.7 percent and 22.4 percent, respectively, in the quarter, despite a 16.8 percent increase in operating expenses.
Net finance costs (+103.2% year on year) increased in the quarter due to a 129.9% year-on-year increase in finance costs in Q1 2023 to N8.06 billion from N3.51 billion in Q1 2022, despite a 218.5% year-on year increase in finance income.
Overall, pre-tax profit increased by 36.3 percent year on year to N18.53 billion in the first quarter of 2023. Following a tax expense of N5.73 billion, profit after tax increased by 44.3 percent to N12.80 billion in the first quarter of 2023.
“Dangote Sugar’s performance in Q1, 2023 came in as expected, with profitability growing significantly during the period,” said Cordros Securities Limited. As stated in our 2022 full year update, we expect Dangote Sugar’s performance to benefit from the favourable demographics for sugar consumption.”
Aliko Dangote, chairman of Dangote Sugar, stated at the company’s Annual General Meeting, “the shareholders are very happy with the way we have been running their company and also in reinvesting the profit into the Backward Integration Programme (BIP) for the sugar industry.”
“We will do our part to ensure that Nigeria becomes self-sufficient in sugar in a very short period of time.” We are not the only players, but we will undoubtedly contribute. We should be able to produce over 170,000 tonnes, which is by far the highest amount produced locally in Nigerian history.”
He promised that management would continue to implement strategic actions to sustain performance, with the support of all stakeholders, while adhering strictly to the tenets of the federal government’s Sugar Master Plan.
Dangote stated that 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, contributed to Dangote Sugar’s success.
Dangote went on to say that during the fiscal year under review, the first phase of the Sugar Master Plan implementation period came to an end, and the federal government approved the second phase over the next ten years, citing a review of the first phase by the National Sugar Development Council and other government parastatals, which took into account the challenges and unforeseen circumstances that plagued the first phase of t
Ravindra Singhvi, Group Managing Director/CEO of Dangote Sugar Refinery, stated that “despite the challenges, implementation of the Sugar Projects initiatives continued at a high tempo.” However, we maintained our victories by maintaining a peaceful environment with the communities and by maintaining positive engagement with state and community stakeholders, as evidenced by their continued support for the DSR Backward Integrations Project.
“The situation with the Lau/Tau project remains unchanged, and we hope that the Taraba State Government will resolve the community issues and focus on the development, rehabilitation, and upgrade of our facilities at the Dangote Sugar Refinery, Numan Operations, and Nasarawa Sugar Company Limited, Tunga.”
“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,” he said, adding that the Board and Management remain resolute and committed to ensuring a sustainable future for the business with the Dangote Sugar Master Plan.
In terms of the future, the CEO stated, “we will continue to strategically position our brand, optimise our processes and cost efficiency, and implement our strategic initiatives; the Sugar for Nigeria Backward Integration Project Master Plan.”
“This has been pursued with vigour, and achievement of the targets will ensure Dangote Sugar’s growth into an integrated sugar production business and a sustainable future for the company.”
In addition, Dangote Sugar Refinery Group Chief Finance Officer Oscar Mbeche stated that “in 2022, the company recorded another impressive year of financial performance and achieved growth over 2021 financial performance.” Sales volume increased by 10%, which, combined with higher prices, contributed to revenue increasing by 46% in 2022, from N276.1 billion to N403.2 billion.
“The company continued to expand its supply chain footprint in Nigeria, which was complemented by excellent customer service, which maintained customer loyalty and helped to sustain revenue growth.” The company’s primary focus remains on providing high-quality sugar to its customers.”
Mbeche explained that DSR 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 company’s inception, increasing by 64% over 2021 volume.
However, he stated that significant impediments remain to be overcome, namely the challenges of securing funds to import capital assets to support BIP development plans, as well as poor infrastructure, among others, which he claims slows the pace at which DSR can achieve further financial and performance efficiencies in the BIP operations.
Dangote Sugar controls more than 60% 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 to consumers and industrial markets nationwide under the brand name ‘Dangote Sugar’.