October 31, 2024/CSL Research
Dangote Sugar Refinery Plc. (DSR) recently released its 9M 2024 results, reporting a 56.4% y/y Revenue growth to ₦484.43 billion from ₦309.71 billion in 9M 2023. On a quarterly basis, Revenue also advanced by 9.2% q/q, reaching ₦188.80 billion in Q3 2024 compared to ₦172.90 billion in Q2 2024. We posit that the Revenue growth recorded was driven mainly by price increases in the period. Revenue numbers for the reporting segments are as detailed below:
• Sale of Sugar – 50kg: ₦467.79bn, up 57.0% y/y from ₦298.00bn in 9M 2023. Contributed 96.57% of overall Revenue compared to 96.22% in 9M 2023.
• Sale of Sugar – Retail: ₦13.08bn, up 53.7% y/y from ₦8.51bn in 9M 2023. Added 2.70% to total Revenue in 9M 2024, down from 2.75% in 9M 2023.
• Sale of Molasses: ₦3.20bn, up 62.7% y/y from ₦1.54bn in 9M 2023. Contributed 0.66% to overall Revenue compared to 0.63% in 2023.
• Freight Income: ₦364m, down 70.7% y/y from ₦1.19bn in 9M 2023. Contributed 0.08% to total Revenue, down from 0.40% in 9M 2023.
Regionally, Revenue from Lagos grew markedly by 97.8% y/y to ₦269.81bn from ₦136.43bn in 9M 2023. The region contributed 55.70% to the overall Revenue in 9M 2024 compared to 44.05% in the corresponding period of 2023. Annualized asset turnover for DSR improved to 0.92x in 9M 2024, up from 0.73x in FY 2023.
Source: Company Financials, CSL Research |
In the first nine months of 2024, DSR’s Cost of Sales rose sharply by 89.6% y/y to ₦464.43 billion, up from ₦245.06 billion in the same period of 2023. This increase was primarily due to higher raw material costs, compounded by the depreciation of the domestic currency, which raised the import costs for raw sugar. As a result, DSR’s cost-to-sales ratio worsened significantly, reaching 95.9% in 9M 2024 compared to 79.1% in the prior year. Gross Profit dropped 69.3% y/y to ₦19.82 billion, down from ₦64.66 billion in 9M 2023, while the Gross Margin contracted by 16.8 percentage points, falling to 4.1% from 20.9% in 9M 2023.
Total Operating Expenses for DSR increased to ₦12.33bn in 9M 2024 compared to ₦9.53bn in 9M 2023, pushed mainly by an increase in employee costs (+24.12% y/y to ₦4.63bn) under its administrative expense line. Overall, OPEX margin for DSR dipped marginally to 2.5% in 9M 2024, down from 3.1% in 9M 2023.
DSR’s 9M 2024 EBITDA was ₦17.08bn, down 73.2% y/y from ₦63.75bn in 9M 2023 while EBITDA margin in 9M 2024 crashed by 17.1 percentage points to 3.5%, down from 20.6% in 9M 2023. Operating Profit for DSR followed a similar pattern, declining by 85.5% y/y to ₦8.17bn in 9M 2024 compared to ₦56.14bn in 9M 2023 while Depreciation, Amortization, and Impairment Loss on assets climbed by 17.1% y/y to ₦8.91bn for 9M 2024 from ₦7.61bn in the same period as 2023. The company’s EBIT margin for 9M 2024 stood at 1.7%, 16.4 percentage points lower than the 18.1% recorded in the same period last year.
Finance Income for DSR in 9M 2024 was ₦6.93bn, compared to ₦7.24bn in 9M 2023. This was due to the reduced volume of short-term bank deposits for the company in the period. On the other hand, Finance Cost grew by 176.1% y/y to ₦300.17bn in 9M 2024, up from ₦108.72bn in 9M 2023 due to the increased bank borrowings and exchange losses recorded in the period. FX losses recorded in 9M 2024 jumped by 156.6% y/y to ₦233.50bn compared to ₦91.00bn in 9M 2023 with ₦224.82bn of the FX loss currently classified as an unrealized exchange loss. Consequently, Net Finance Cost for DSR increased significantly in the period, advancing by 189.0% y/y to ₦293.25bn in 9M 2024, up from ₦101.48bn in 9M 2023.
Overall, DSR’s Loss Before Tax increased by 566.9% y/y to ₦275.58bn in 9M 2024 compared to a loss of ₦41.35bn in 9M 2023. After accounting for an income tax credit of ₦91.23bn, Loss after Tax for DSR settled at ₦184.36bn, up 582.1% y/y from a loss of ₦27.03bn in 9M 2023.
Our estimates are currently under review. Current Price: ₦31.00/share.
Kindly click on the below link to download the full report.
DANGSUGAR 9M 2024 Quick Take.pdf
