Nigeria’s biggest sugar refiner, Dangote Sugar Refinery Plc, kicked off the year 2019 on a positive note as its management showed efficiency in utilizing the company’s limited resources for increased profitability.
After-tax profit of the sugar refiner rose to N7 billion in the first three months of 2019, representing a 32.7 percent increase from N5.28 billion in the same period a year earlier, while pre-tax profit surged more than a quarter to N10.7 billion from N8.4 billion.
Margins of the company were impressive for the period. Net profit margin improved to 18.4 percent from 12.8 percent, implying the company gained more than N18 from every N100 revenue it generated from sales between January and March 2019.
Despite a 17.2 percent cut in the cost of goods sold by the sugar giant to N25.56 billion, gross profit surged 22.4 percent to N12.59 billion, this could have been more if revenue, which dropped to N38.15 billion, had rebounded from its downward spree.
Sales of Nigeria’s major sugar producers came under severe pressure in 2018 owing to the persistent gridlock in and around Apapa port environment and the high rate of smuggling of cheap unlicensed sugar into the country with the Nigeria’s biggest sugar refiner getting the worst hit.
Although Dangote Sugar’s gross earnings were impacted negatively by declined revenue proceeds from the sale of 50kg sugar and molasses in the review period, it was augmented by lower cost of raw material, direct labour cost, depreciation and other overheads.
The prudent management of the company’s resources was not limited to the cost of production, it was extended to its operating activities as selling and distribution expenses were slashed by 42.7 percent to N178.3 million, while administrative expenses witnessed 2.8 percent decline to N1.58 billion in the review quarter.
Consequently, operating profit enjoyed a N2.4 billion boost to N10.9 billion. Net finance expenses declined to N41.4 million from N47.5 million, while the company’s investment income, which stood at N314 million, was 64 percent lower from N872 million, and was supported by lower fair value adjustment.
Shareholders’ funds of Dangote Sugar fell to N105.98 billion from N107.43 billion on the back of a 4.9 percent decrease in its total assets to N185.2 billion as against N194.8 billion recorded as at the end of Q1 2018, even as liabilities dropped to N79.22 billion from N87.4 billion.
The decline in its total assets value was as a result of lower cash and cash equivalents including cash on hand and in banks, and short term deposits with 30 days tenure. Dangote Sugar’s cash and cash equivalents as at the end of the reporting period was halved to N21.8 billion from N44 billion.
Shares of Dangote Sugar Refinery on the Nigerian Stock Exchange (NSE) fell for the second straight day on Monday, April 29, by 1.75 percent to close at N14, worsening its year-to-date loss to 8.20 percent. The stock’s current price is 55 kobo close to its year-low of N13.45.
OLUWASEGUN OLAKOYENIKAN
