H1 2023: Dangote Sugar reports 9.3% growth in revenue to N202.78bn

By Philemon Adedeji

Dangote Sugar Refinery plc, has released its unaudited results for the period ended June 30th, 2023,  reporting a 9.3 per cent y/y growth in revenue to N202.78 billion at the end of June 30th, 2023 from N185.46 billion generated in H1 2022.

Its topline performance was driven by growth in sales of sugar (50kg), sugar (retails) and molasses to N194.19 billion (+8.3 per cent y/y), N5.86 billion (+70.8 per cent y/y) and N1.54 billion (+7.9 per cent) respectively in H1 2023 while Freight Income declined by 13.2 y/y to N1.19 billion in the period.

Quarterly, the company’s Revenue waned by 1.6 per cent q/q to N100.56 billion in Q2 2023 from N102.26 billion in Q1 2023 as the realities of inflationary pressures kick in.

The Cost of Sales pared by 9.3 per cent y/y to N144.60 billion in H1 2023 from N146.64 billion in H1 2022 resulting in a growth of 7.9ppts in its gross profit margin to 30.4 per cent from 22.5 per cent y/y in H1 2022.

Operating Expenses (adjusted for depreciation) closed the period at N4.66 billion (+24.1 per cent y/y) from N3.76 billion in H1 2022.

Thus, the company’s OPEX margin settled at 2.3 per cent in H1 2023 from 2.0 per cent in H1 2022. Depreciation and Amortisation was up by 18.0 per cent y/y to N4.90 billion from N4.15 billion in H1 2022.

The company’s Other Income declined by 51.90 per cent y/y to N145 million from N301 million in H1 2022 while its Earnings Before Tax (EBIT) surged by 53.0 per cent y/y to N52.20bn in H1 2023 from N34.12 billion in H1 2022.

The devaluation of the nation’s currency largely contributed to the jump in the company’s Finance Cost as it came in at N90.66 billion from N7.31bn in H1 2022.

The company’s Finance Income of N4.85 billion in H1 2023 (+148.9 per cent y/y from N1.95 billion in H1 2022) was unable to offset the decline in Net Finance Cost as it closed at N85.81 billion in H1 2023 from N5.36 billion in H1 2022.

The company’s change in fair value adjustment resulted in an inflow of N2.25 billion, a 31.6 per cent y/y growth from N1.71 billion in H1 2022.

Overall, Dangote sugar reported a Loss Before Tax of N31.37 billion compared with a Profit Before Tax of N30.46 billion in H1 2022 and a Loss After Tax of N27.99 billion in H1 2023 (vs Profit After Tax of N20.97 billion in H1 2022).

We have a Hold recommendation on Dangsugar, with a price target of N30.10. Current Price: N30.00/s.

Dangote Sugar Refinery Plc commenced business in March 2000 as the sugar division of Dangote Industries Limited. The sugar refining factory at Apapa port was commissioned in 2001 with an initial installed capacity to process 600,000 MT of raw sugar per annum. In December 2007, DSR Plc successfully exported its first consignment of 1,500MT of sugar to Ghana.

Dangote Sugar Refinery Plc is listed on the Nigerian Stock Exchange (NSE). The company’s shares were listed on the NSE on March 8, 2007 at N18/share following the divestment of 25 per cent holdings of The Dangote Group (Dangote Industries Limited) via an initial public offering (IPO) of 10 billion shares in November/December 2007.

The company’s installed capacity is close to 1.44 million metric tons p.a with about 75 per cent current capacity utilisation.