• Monday, December 23, 2024
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Dangote Sugar defies challenges, lifts profits by 60% to N24.8bn

Dangote Sugar defies challenges, lifts profits by 60% to N24.8bn

Despite economic headwinds, Dangote Sugar Refinery proved to be quite tenacious, reporting a 60 percent surge in profit in the first nine months of 2022 to N24.8 billion from N15.5 billion in the nine-month period of 2022.

Revenue reported by the firm grew by 47 percent to N288.32 billion in the nine-month period of 2022 from N195 billion in the corresponding period of 2021, the highest reported in ten (10) years.

Consequently, the profit margin was up 68 basis points to 8.61 percent in the nine-month period of 2022 from 7.93 percent in the nine-month period of 2021.

Ravindra Singhvi, group managing director of Dangote Sugar Refinery Plc in his remarks attributed the positive results in the nine months to critical trade interventions introduced during the year and positive market responses.

He said, “Our impressive performance in the period demonstrates our resilience in the face of prevalent challenges, which is rightly reflected in strong topline growth shown in the financial results.”

With rising inflation impacting the cost of raw materials, the cost of sales reported by the sugar maker claimed 80 percent of the total revenue reported in the nine-month period of 2022. Cost of sales grew by 45.44 percent to N230.88 billion in the nine-month period of 2022 from N158.75 billion in the same period of 2021.

Operating expenses (OPEX) fell by 4.34 percent in the nine-month period of 2022 to N7.9 billion from N8.29 billion in the nine-month period of 2021 on the back of administrative expenses which declined during the period.

Selling and distribution expenses were up 3.62 percent to N558 million in the nine-month period of 2022 from N538 million in the nine-month period of 2021.

Dangote sugar

On account of rising interest rates, finance income and finance costs reported by Dangote Sugar spiked by 334 percent and 202 percent respectively in the nine months period of 2022.

Finance income on the back of interest income generated from bank deposits to N3.68 billion in the nine-month period of 2022 from N847.6 million in the nine-month period of 2021.

The firm reported an exchange loss in the course of the business of N14.33 billion in the nine-month period of 2022, 405 percent up from N2.84 billion in the nine-month period of 2022 due to the naira depreciation during the period.

Read also: Nigeria, US firm sign agreements on clean, reliable electricity

Finance cost on letters of credit grew by 37.5 percent to N4.47 billion in the nine-month period of 2022 from N3.25 billion in the corresponding period of 2021.

Interest on lease payments and bank loans both declined and amounted to N81.69 million and N94.98 million respectively in the nine-month period of 2022.

Consequently, finance costs grew to N18.97 billion in the nine-month period of 2022 from N6.29 billion in the corresponding period of 2021.

Dangote sugar

Dangote Sugar’s total assets grew by 46.55 percent to N474.05 billion in the nine-month period of 2022 from N323.48 billion in the corresponding period of 2021, while its total shareholder’s equity grew by 15.75 percent to N141.32 billion from N122.09 billion in the periods under review.

Cash and cash equivalents, the value of a company’s assets that are cash or can be converted into cash immediately surged by 175.21 percent to N169.75 billion in the nine-month period of 2022 from N61.68 billion in the nine-month period of 2021.

Furthermore, Dangote Sugar generated N94.87 billion from its operations in the nine months period of 2022, after tax deductions net cash from operations amounted to N88.5 billion, representing a 14.53 percent increase from N77.27 billion in the nine-month period of 2021.

This indicates that during the period, the sugar producer not only generated enough cash to cover its short-term liabilities, but the cash generated during the period was higher than that generated in the same period of last year.

Net cash flow from investing activities on the other hand was negative during the period totaling N9.46 billion largely due to the N13.14 billion spent on the purchase of new property, plant, and equipment.

Net cash flow from financing activities was also negative, amounting to N12.30 billion in the nine-month period of 2022 largely due to the N12.15 billion spent on paying dividends.

Dangote Sugar Refinery reported earnings per share of N2.04 per share in the nine-month period of 2022 up from N1.02 per share reported in the nine-month period of 2021.

Recently, Aliko Dangote, president of the Dangote Group, announced that the Dangote Sugar Refinery Plc is significantly scaling up its investment in the sugar sub-sector in line with the requirement of the Nigeria Sugar Master Plan.

The company said it is committing over $700 million to its investment in the Backward Integration Programme.

Speaking at the flag-off ceremony of the 2022/2023 Crushing Season and Outgrower Scheme Awards in Numan, Adamawa State, Dangote said the company is making massive investments in Adamawa State through the expansion of DSR Numan sugar refining capacity from 3,000 tonnes of cane per day (tcd) to 6,000 tcd, 9,800 tcd and to 15,000 tcd.

He said increasing the sugar refining capacity will require a corresponding increase in sugarcane production capacity.

Dangote said the company has concluded plans to increase its sugar plantation from the current land area under cane production of about 8,700 hectares in 2022 to about 24,200 hectares within the next seven years.

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