Dangote Sugar Refinery Plc, a major operator in the production, refining, and marketing of sugarin Nigeria, has reported its first loss in at least 13 years, according to a BusinessDay analysis.
A growing number of manufacturers including Guinness Nigeria Plc, International Breweries Plc, PZ Cussons Nigeria Plc, Nigeria Breweries Plc and Cadbury Nigeria Plc have reported losses for last year.
In its latest audited financial statements, Dangote Sugar Refinery posted an after-tax loss of N73.8 billion in 2023 compared to a profit of N54.7 billion in the previous year.
Analysts attributed the decline in the company’s performance to the foreign exchange loss which widened to N172.2 billion from N1.89 billion as a result of the naira devaluation.
“In its full-year 2023 audited result, Dangote Sugar reported a N73.8 billion loss that was primarily driven by foreign exchange losses incurred during the period,” analysts at CardinalStone Research said in a note on Monday.
“Specifically, the company recorded material increases in net exchange losses on its business operation (N172.2 billion vs N1.9 billion in 2022) and letters of credit (280.5 percent year on year to N29.2 billion),” they added.
CardinalStone said in addition to the impact of FX movements, the new intercompany loan of N117.5 billion added further pressures to finance cost and bottom line.
Further analysis of the statement shows that Dangote Sugar’s cost of sales rose to N355.1 billion from N311.3 billion while its revenue grew to N441.5 billion from N403.2 billion.
Revenue from the sale of 50kg of sugar rose to N426.4 billion from N390.9 billion and revenue from the sale of retail sugar increased to N11.46 billion from N7.89 billion.
Revenue from the sale of molasses increased to N2.29 billion from N2.15 billion.
“Dangote Sugar’s subpar performance underscores its sloppy operation and poor sales turnover in the year, further exacerbated by broader operational challenges, including escalating inflation, currency devaluation, and constrained consumer wallet,” analysts at Cordros Research said in a note on Monday.
“Looking ahead, we envisage an uptick in sales volume coupled with further price adjustments to ensure decent topline growth,” it said. “Even as we like management’s initiatives of containing rising costs and moderate FX dependence in the long-term with the pursuit of more efficient supply chain infrastructure and backward integration projects,” they added.
The manufacturer’s total assets rose to N600.8 billion from N492.4 billion while total liabilities grew to N600.8 billion from N492.4 billion.
Freight income dropped to N1.26 billion from N2.26 billion. Other income was reduced to N1.23 billion from N1.44 billion.
Selling and distribution expenses dropped to N644.5 million from N741.1 million while administrative expenses was N13.28 billion, up from N10.31 billion.
Direct labour cost rose to N7.34 billion from N6.66 billion while direct overhead cost increased to N29.78 billion from N26.35 billion.
Impairment loss on financial assets stood at N926.3 million from impairment gains on financial assets of N63.54 million.
Finance income grew to N10.56 billion from N6.38 billion while finance cost to N201.66 billion from N9.8 billion
The firm recorded a loss per share of N6.07 from N4.51. Trade and other payables increased to N487.9 billion from N273.7 billion
Net cash generated from operating activities dropped to N60.93 billion from N105.4 billion.
Net cash used in investing activities recorded a negative N8.96 billion from a negative of N19.57 billion. Net cash used in financing activities recorded a negative of N18.46 billion from a negative of N13.97 billion.
Trade and other receivables rose to N131.8 billion from N107.4 billion.
Cash and cash equivalents rose to N204.8 billion from N174.9 billion. (BusinessDay)
