Dangote Sugar: Resilience amidst 54% surge in input cost

Consumer goods firms are walking a tight rope as a surge in raw material prices, freight costs, and foreign exchange depreciation have squeezed profit margins for a sector looking to recover from the coronavirus pandemic.

Despite challenges, BusinessDay’s findings showed firms like Dangote Sugar are bracing the odds to deliver higher returns to shareholders despite challenges.

For instance, Dangote Sugar Refinery says it recorded N276.50 billion in revenue in 2021, up by 28.8 percent from N214.30 billion recorded in 2020, despite a 56 percent surge in input cost.

The largest maker of the sweetener in Nigeria reported a gross profit of N50.21 billion and profit after tax of N22.05 billion were also recorded.

Dangote sugar saw a push in its raw material cost to N183.4 billion, the highest in seven years coming from N119.4 billion in the previous year.

“The major headwind faced by FMCG companies remains the rising input costs as a result of the consistent hike in the costs of raw materials like wheat, sugar, corn, soybean, barley, sorghum, and skimmed milk, among others. The costs are subsequently transferred to the final consumers,” Olufisayo Ademilua, an equity research analyst with CardinalStone Securities, said.

Ademilua added that the “distribution cost is mainly attributed to inflation”, noting that there was cost efficiency across most FMCGs following the decline in their Opex to sales year on year. The decline in OPEX to sales ratio was a trickle-down effect of robust revenue growth. According to her, companies such as Nestle, Dangote Sugar, UACN witnessed lower OPEX -sales ratios, while Nigeria Breweries’ ratio advanced year on year.

“Volume is growing as revenue is improving, and distribution cost is not affected by just price increase. When volume increases, there will be need for more movement of the products to the final consumers. Combining that with diesel cost that is surging by the day, will definitely lead to a rise in marketing and distribution cost,” Ayodeji Ajilore, investment research analyst with ARM Securities, said.

The company also said there was an increase in group sales volume, which rose by 5.7 percent to 773,341 tonnes, compared with 731,701 tonnes in 2020.

Production volume was also said to have gone up by 9.2 percent to 811,962 tonnes in 2021, compared with 743,858 tonnes in 2020.

In this article, there are five charts that give insights into Dangcem’s growth over the past five years.


Dangote sugar’s revenue jumped 29 percent to N276.1 billion in December 2021, the highest in seven years from N214.3 billion in the previous year.

The company recorded the least revenue of N101.1 billion in December 2015.

Soaring cost of raw materials

Dangote sugar saw a 53.6 percent push in its raw material cost to N183.4 billion, the highest in seven years coming from N119.4 billion in the previous year.

The company spent the least amount on raw materials in the full year of 2015 which amounted to N64.3 billion.

The Dangote Sugar Group sells unfortified sugar mainly to pharmaceutical, food and beverage manufacturers, while Vitamin A-fortified sugar is sold to distributors who sell to small wholesalers, confectioners and other smaller value-adding enterprises who provide the distribution network to the Nigerian retail market.

The Group sells a small amount of sugar directly to retail customers.

Read also: Equities gain N138bn as Dangote Sugar, Berger Paints, others reroute market northward

Retail packaging comes in various sizes of 250g, 500g, and 1kg under the brand name “Dangote Sugar”. Sales to distributors account for 65 percent of the Group’s revenue.

The Group has 4 reportable segments based on location of the principal operations as follows: Northern Nigeria, Western Nigeria, Eastern Nigeria and Lagos.


Dangote sugar’s taxation dropped 24 percent to N12 billion in December 2021, coming from N15.9 billion in December 2020.

The highest taxation paid was N15.9 billion in 2020 while the least amount of tax paid was N5.2 billion in December 2016.

Auditor’s remuneration

Dangote sugar paid N76 million as auditor’s remuneration for the full year of 2021, the highest in its six-year financials. The auditors for Dangote sugar refinery are PricewaterhouseCoopers Chartered Accountants.

The company paid N52.9 million in December 2016 and 2017, the least auditors remuneration in six years.

Employee’s cost

Dangote sugar increased its employee costs by 12 percent to N3.58 billion, the highest in five years from N3.19 billion in December 2020. The least employee cost was N1.99 billion in December 2016.

Dangote Sugar Refinery Plc was incorporated as a Public Limited Liability company on 4 January 2005, commenced operation on 1 January 2006 and became quoted on the Nigerian Stock Exchange in March 2007.

Its current shareholding is 68 percent owned by Dangote Industries Limited and 32 percent by the Nigerian public.

The principal activity of the Group is the refining of raw sugar into edible sugar and the selling of refined sugar. The Group’s products are sold through distributors across the country.

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