Dangote Sugar’s full year profit gets nipped by high production costs

NIGERIA – Dangote Sugar registered a 26% decline in full year profit to N22.05 billion (US$53.09m) in the period ended December 2021.

This was despite attaining a 28% growth in top line performance from N214 billion (US$515m) to N276 billion (US$664.5m), driven by growth in sales volumes.

Group production volume increased 9.2% in the year to 811,962 tonnes from 743,858 tonnes in 2020 on the strength of improved operational efficiency despite the adverse impact of the perennial Apapa traffic gridlock situation.

Meanwhile, total sales volume increased 5.7% in the year to 773,341 tonnes from 731,701 tonnes, supported by the positive market responses to key trade interventions introduced during the year.

The sugar miller’s revenue line is broken into sales of sugar (50kg and retail) and molasses. Dangote sugar generates 97% of its revenue from the sale of 50kg sugar and retail, suggesting that the 50kg sugar is the company’s major income stream.

Group managing director, Dangote Sugar Refinery, Ravindra Singhvi said “Our impressive performance in the year demonstrates our resilience in the face of prevalent challenges, which rightly reflected in strong top line growth shown in the financial results.

“During the year under review, we concluded integration of our new 50kg packaging for the fortified and non-fortified sugar bags in the market.

“This refreshed our brand personality and led to a deeper connection to the Dangote Sugar brand among our valued customers and consumers, whilst sustaining our market presence and leadership with the product quality.”

However, bottom-line profit was greatly subdued by high production costs, occasioned by inflationary pressure, and impact of foreign currency devaluation.

Dangote Sugar Refinery is continuing with its investment plan in the industry in line with the sector’s Backward Integration Policy.

The company has committed over US$700m to its sugar projects and has commenced the rehabilitation and expansion of the Savannah Sugar Company Limited Sugar Factory at Numan, with a key focus to increase production capacity by 6,000 tons of cane per day (TCD).

Dangote has also revealed that sugarcane planting has commenced in two other BIP locations i.e. Tau Sugar Project in Taraba State and Tunga Sugar Project in Nasarawa State.

Its integrated sugar complex to be located in Tunga, Awe Local Government Area of Nasarawa state, comprises an initial 60,000ha sugar plantation and two sugar factories with the capacity to produce 430,000tpa of refined white sugar.

Overall, the sugar processor aims to produce 1.5 million tonnes of refined sugar every year from locally grown sugarcane within the next ten years, to serve both the local and international markets.