March 4, 2025/Cordros Report

Dangote Sugar Refinery Plc (DANGSUGAR) released its 2024FY audited financials today, reporting a loss per share of NGN15.86 (vs loss per share of NGN6.07 in 2023FY). The loss for the year was triggered by mounting pressure from COGS (+78.7% y/y) and the elevated net finance costs (+53.7% y/y) stemming from exchange loss on letters of credit in the period.

DANSUGAR’s revenue increased by 50.8% y/y (Q4-24: +37.6% y/y), driven by broad based growth across its 50kg Sugar (+51.0% y/y | 96.7% of revenue), Retail sugar (+52.3% y/y | 2.6% of revenue) and Molasses (+81.9% y/y | 0.6% of revenue) business segments, as Freight income (-73.0% y/y | 0.1% of revenue) declined. Across its geographical footprint, DANGSUGAR witnessed topline growth in its Lagos (+82.6% y/y | 56.1% contribution), North (+18.2% y/y | 32.4% contribution), West (+43.8% y/y | 8.3% contribution) and East (+32.7% y/y | 3.1% contribution) regions. We highlight that the revenue expansion in the period was primarily due to price increases in response to rising cost pressures.

Gross margin (-14.88 ppts) contracted to 4.7%, following the 78.7% y/y growth in cost of sales. The cost pressures stemmed mainly from higher cost of raw materials (+84.5 % y/y | 86.0% of COGS) due to the highly inflationary environment and currency depreciation. Consequently, EBITDA (-14.92 ppts) and EBIT (-14.56 ppts) margins deteriorated to 3.8% and 1.9%, respectively, further pressured by a 41.8% y/y growth in operating expenses.

Net finance costs surged by 53.7% y/y, following a 49.4% y/y rise in finance cost and a 27.9% y/y decline in finance income. Precisely, the surge in finance costs is largely attributed to the increase in net exchange losses incurred on letters of credit to NGN208.90 billion (vs NGN172.20 billion in 2023FY).

Consequently, 2024FY pre-tax loss settled at NGN270.89 billion (vs pre-tax loss of NGN108.92 billion in 2023FY). With a tax credit of NGN78.28 billion, loss after tax came in at NGN192.62 billion (vs loss after tax of NGN73.76 billion in 2023FY).

Comment: DANGSUGAR’s performance in the year highlighted the negative impact of the naira depreciation and highly inflationary environment. Looking ahead, we expect another resilient topline performance from the company in 2025E, with a softening of inflation and currency pressures likely to drive a return to profitability. Our estimates are under review.