Dangote Sugar Refinery Plc, a major operator in the production, refining, and marketing of sugar in Nigeria, has said the best future for the company is backward integration to reduce foreign exposure risk and ensure that the entire production is domestic.
Aliko Dangote, chairman, board of directors of Dangote Sugar made this known at the 18th annual general meeting on Tuesday in Lagos.
“The best future for this company is backward integration and it will give more profit, stability and will erase foreign exchange rate losses. In the next few years, our company should be producing what we are selling 100 percent domestic,” he said.
“If we import any sugar, it will be to complement what we are producing. Our target is to hit about 700,000 metritons in the next five years to satisfy 50 percent of the current demand,” Dangote said.
Dangote Sugar reported its first loss in at least 13 years on the back of foreign exchange loss which was driven by the naira devaluation.
Dangote’s sugar business recorded an after-tax loss of N73.8 billion in 2023 compared to a profit of N54.7 billion in 2022.
The firm recorded a foreign exchange loss which widened to N172.2 billion from N1.89 billion as a result of the naira devaluation.
“In its full-year 2023 audited result, Dangote Sugar reported a N73.8 billion loss that was primarily driven by foreign exchange losses incurred during the period,” analysts at CardinalStone Research said in a note on Monday.
CardinalStone analysts said in addition to the impact of FX movements, the new intercompany loan of N117.5 billion added further pressures to finance cost and bottom line.
“We did not pay dividends for 2023 but we are doing whatever it takes to make sure that we get out of the devaluation of naira which devalued from N460/$1 to N1400/$1,” Dangote said at the Annual General Meeting.
While ensuring shareholders there will be a dividend payout in 2024, he said: “Going forward the firm is really careful and trying to get out of the foreign exchange situation.
“The future is we should not be involved in the purchase of foreign exchange and ensure the entire production is domestic. We want to make sure that we keep reducing the demand for FX; we want to produce what we consume.”
Dangote said almost 95 to 97 percent of the companies in food and beverage businesses will not pay dividends in 2023 but Dangote Sugar will have to get out of it as soon as possible.
Ravindra Singhvi, group managing director/CEO of Dangote Sugar said despite the difficulties caused by Forex volatility and scarcity, the board and management made the Dangote Sugar Master Plan a reality.
“Our strategic focus remains the achievement of the ‘Sugar for Nigeria’ master plan which is tailored towards the attainment of sugar self-sufficiency for Nigeria with the production of 1.5M MT of granulated sugar annually from our sugar estates in the country under the Nigeria Sugar Master Plan.
“We completed the engineering design of the 12,000TCD factory and successfully signed the equipment supply agreement for Nasarawa Sugar Project,” he said.
Singhvi stated that the peaceful environment the firm achieved over the years was sustained with the communities and they have continued to support Dangote Sugar Refinery Backward Integration Projects.
