July 31, 2024/CSL Research

In its H1 2024 earnings result, Dangote Sugar Refinery Plc’s (DSR) Revenue was up 45.8% y/y to N295.62bn from N202.78bn in H1 2023. On a q/q basis, Revenue was also higher by 40.9% to N172.90bn in Q2 2024 from N122.73bn in Q1 2024. Revenue growth was largely driven by volume growth while prices increased moderately. Specifically, all the company’s revenue segments experienced growth except one as detailed below:

 Sugar – 50kg: Increased to N284.19bn, up 46.3% y/y.

 Sugar Retail: Grew to N8.60bn, a growth of 46.7% y/y.

 Molasses: Up to N2.56bn, an impressive 66.2% y/y increase.

 Freight Income: down 77.5% y/y to N268m

DSR reported an adjusted Cost of Sales of N272.61bn for H1 2024, marking a 93.8% hike from N140.68bn in H1 2023. This increase in costs resulted in a Gross Profit of N23.02bn for the quarter, down from N62.10bn in the same period last year. Consequently, the company’s Gross Profit Margin decreased to 7.8% in H1 2024 from 30.6% in H1 2023.

The company’s Operating Expenses, excluding depreciation, increased to N6.84bn in H1 2024 compared to N5.16bn in H1 2023. This increase was driven mainly by higher Administrative Expenses which increased to N6.53bn in H1 2024 from N4.85bn in H1 2023 while Selling and Distribution Expenses, also grew to N310m in H1 2024 from N304m in H1 2023.

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The company reported an Impairment Loss on Financial Assets of N34m in H1 2024. DSR’s EBITDA increased to N16.21bn (+24.8% y/y) in H1 2024 from N4.89bn in H1 2023 as its EBITDA margin declined to 5.5% in H1 2024 from 28.1% in H1 2023. The company’s Depreciation was up 24.8% y/y to N6.10bn in H1 2024 from N4.89bn in H1 2023. Meanwhile, its Fair Value Adjustment surged to N8.20bn in H1 2024 from N2.25bn in H1 2023. Its Operating Profit was significantly down 66.3% y/y to N18.31bn in H1 2024 from N54.45bn in H1 2023.

DSR’s Other Income increased to N216m in H1 2024 from N145m in H1 2023 as its EBIT to N18.52bn in H1 2024 from N54.45bn in H1 2023. Finance Income came in at N4.24bn in H1 2024 from N4.85bn in H1 2023 while its Finance Costs surged to N234.19bn in H1 2024 (largely driven by an FX Loss of N193.68bn in H1 2024 from N83.10bn in H1 2023). Consequently, its Net Finance Cost was N229.94bn in H1 2024 from N85.81bn in H1 2023. The significant rise in the company’s Net Finance Cost brought its Loss Before Tax of N211.04bn in H1 2024 from N31.63bn in H1 2023 while its Loss After Tax was N144.01bn (after the inclusion of a Tax Credit of N67.41bn) in H1 2024 from a Loss of N27.99bn in H1 2023.

We have a Sell recommendation on DSR with a target price of N35.62/s. Current Price: N37.15/s.

Kindly click on the below link to download the full report.

​​​​​​Dangsugar H1 2024 Quick Take.pdf​​

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