Dangote Sugar posted a pre-tax loss of N104.6 billion in the second quarter of 2024, marking a 110% year-on-year decline from the N49.9 billion pre-tax loss posted in Q2 2023.
In Q2 2024, the company posted a revenue of N172.9 billion, contributing to a half-year revenue of N295.6 billion.
During the second quarter, the company recorded a 72% year-on-year revenue growth from the N100.6 billion revenue posted in Q2 2023.
Due to a 140% rise in the group’s cost of sales, there was a 71% year-on-year decline in the group’s gross profit to N9.4 billion, from N32.4 billion as of Q2 2023.
It also led to a 83% YoY decline in operating profit to N5.03 billion, from N29.3 billion as of Q2 2023.
In the first half of 2024, Dangote Sugar incurred FX losses of about N193.7 billion, about 133% greater than the N83.1 billion FX loss incurred in H1 2023.
This contributed to a 158% YoY increase in the group’s finance cost during the half to N234.2 billion, from N90.7 billion as of H1 2023.
Dangote Sugar’s biggest customer is Nigerian Bottling Company (NBC), the company makes up about 37% of Dangote Sugar’s total revenue with about N62.7 billion in Q2 2024.
Key Highlights Q2 2024 vs Q2 2023
- Revenue: N172.9 billion, +72% YoY
- Cost of sales: N163.5 billion, +140% YoY
- Gross profit: N9.4 billion, -71% YoY
- Operating profit: N5.0 billion, -83% YoY
- Net finance cost: N109.3 billion, +36% YoY
- (Loss)/Profit before tax: (N104.6 billion), -110% YoY
- (Loss)/Profit for the period: (N75.0 billion), -84% YoY
- Total assets: N714.7 billion, +19% YoY
Commentary: In the first half of 2024, Dangote Sugar Refinery’s current liabilities hit N777 billion, marking a 49% increase from the N521.2 billion at the start of the year. The N141.3 billion generated from commercial papers was a significant contributor to this increase.
During the period, the company’s trade and other payables increased by 17% to N572.1 billion, from N487.9 billion at the start of the year.
The company’s shift away from bank loans was reflected, as its total bank loan at the end of the half-year was about N394.3 billion, reflecting a 26% decline from the N531.6 million at the start of the year, as it spent about N153.7 million repaying bank loans. Dangote Sugar, however, shifted to bank overdrafts, as it received N25.4 billion in bank overdrafts during the six-month period.
The need for Dangote Sugar to adopt cost-cutting measures has become pertinent, now more than ever, especially due to its declining profit profile. In the first half of 2024, the company accrued revenue of N295.6 billion, reflecting a 46% YoY increase from the N202.8 billion revenue generated in H1 2023.
However, with the cost of sales hitting N277.5 billion and appreciating by 92% YoY within the period, there was a 69% decline in gross profit during the six months. The lowering profit profile combined with a trade payable of N572 billion within six months tells a tale of the dire strait the company’s finances are in.
Out of the N193.7 billion exchange loss Dangote Sugar incurred in H1 2024, only about N8.16 billion is realized.