Dangote Sugar Refinery reported a pre-tax loss of N104.6 billion in the second quarter of 2024, a significant 110 per cent decline from the N49.9 billion pre-tax loss recorded in the same period of 2023.
Despite the challenges, the company posted a second quarter of 2024 revenue of N172.9 billion, contributing to a half-year revenue of N295.6 billion.
This revenue figure represents a 72 per cent year-on-year growth from the N100.6 billion earned in the second quarter of 2023.
However, a sharp 140 per cent increase in the group’s cost of sales led to a 71 per cent year-on-year decline in gross profit, dropping to N9.4 billion from N32.4 billion in the second quarter of 2023.
Operating profit also fell by 83 per cent year-on-year, down to N5.03 billion from N29.3 billion in the previous year.
In the first half of 2024, Dangote Sugar incurred significant forex losses amounting to N193.7 billion, a 133 per cent increase from the N83.1 billion forex loss in the first half of 2023.
This, coupled with rising finance costs, which surged 158 per cent year-on-year to N234.2 billion from N90.7 billion, severely impacted the company’s financial performance.
The Nigerian Bottling Company (NBC), Dangote Sugar’s largest customer, contributed about 37 per cent of the company’s total revenue, with N62.7 billion in sales during the second quarter of 2024.
In commentary on the company’s financial health, Dangote Sugar’s current liabilities reached N777 billion by the end of the first half of 2024, a 49 per cent increase from N521.2 billion at the start of the year.
A significant portion of this increase was due to N141.3 billion raised from commercial papers. Additionally, the company’s trade and other payables rose by 17 per cent to N572.1 billion, up from N487.9 billion at the beginning of the year.
Dangote Sugar has shifted away from traditional bank loans, with total bank loans declining by 26 per cent to N394.3 billion from N531.6 billion at the start of the year, following repayments of N153.7 billion.
However, the company has increasingly relied on bank overdrafts, receiving N25.4 billion during the first six months of 2024.
The need for Dangote Sugar to adopt cost-cutting measures is more pressing than ever, given its declining profit margins and rising liabilities.
Although the company achieved a 46 per cent year-on-year increase in revenue to N295.6 billion in the first half of 2024, the soaring cost of sales, which hit N277.5 billion—up 92 per cent year-on-year—led to a 69 per cent decline in gross profit over the same period.
