October 30, 2026/Cordros Report
Dangote Sugar Refinery Plc (DANGSUGAR) released its unaudited Q3-26 results today, reporting standalone EPS of NGN1.62 (+43.6% y/y), bringing 9M-26 EPS to NGN3.67 compared to loss per share of NGN0.87 in 9M-25. Earnings growth was primarily supported by a 76.8% y/y reduction in finance costs, which more than offset the drag from weaker revenue and softer operating profitability.
DANGSUGAR’s revenue declined by 9.4% y/y in Q3-26 (9M-26: -9.1% y/y), reflecting a weaker-than-expected recovery in volumes in the 50kg sugar segment, amid limited pricing support. The 50kg sugar business remained the dominant contributor, accounting for 97.7% of group revenue, down 21bps y/y from 97.9% in Q3-25, as sales declined by 9.6% y/y (9M-26: -8.8% y/y). In contrast, the Retail sugar segment recorded marginal revenue growth of 1.6% y/y in Q3-26, although 9M-26 revenue remained down 12.4% y/y. Freight income surged by 913.4% y/y (9M-26: +211.9% y/y), albeit from a low base, with its contribution to group revenue rising to 0.1%. Meanwhile, the Molasses business remained under pressure, with revenue declining by 49.6% y/y (9M-26: -41.8% y/y), reducing its contribution to group revenue to 0.1% from 0.2% in Q3-25.
Gross margin contracted by 121bps y/y to 18.4% in Q3-26, as revenue declined by 9.4% y/y, outpacing the 8.1% reduction in cost of sales. The moderation in cost of sales was supported by a 25.1% y/y decline in raw material costs, with the 3.7% y/y appreciation of the naira likely providing additional relief on imported inputs. In contrast, 9M-26 gross margin expanded by 783bps y/y to 22.2%.
Consequently, EBIT margin contracted by 127bps y/y to 20.7% in Q3-26, despite a 2.4% y/y decline in operating expenses, as weaker gross profitability weighed on operating performance. This contrasted with 9M-26, where EBIT margin expanded by 965bps y/y to 22.6%, reflecting stronger operating efficiencies during H1-26. Meanwhile, EBITDA margin expanded by 187bps y/y to 27.6% in Q3-26, largely reflecting the higher depreciation charge (+66.5% y/y). Similarly, 9M-26 EBITDA margin expanded by 12.62ppts y/y to 28.9%, reflecting stronger underlying operating performance alongside a 71.8% y/y increase in depreciation charges.
Importantly, net finance costs declined by 83.9% y/y to NGN4.84 billion in Q3-26 (9M-26: -43.3% y/y), supported by a 76.8% y/y reduction in finance costs (9M-26: -39.8% y/y) and a 371.5% y/y surge in interest income on bank deposits (9M-26: +56.1% y/y). The reduction in finance costs reflected lower borrowing costs, with letter of credit charges, interest on commercial papers and overdraft interest expense declining by 78.3%, 95.0% and 94.3% y/y, respectively.
Consequently, PBT surged by 154.7% y/y to NGN34.08 billion in Q3-26, bringing 9M-26 PBT to NGN78.18 billion, compared with a loss before tax of NGN8.72 billion in 9M-25. Similarly, PAT increased by 139.3% y/y to NGN32.74 billion in Q3-26, while 9M-26 PAT reached NGN74.25 billion, reversing the loss after tax of NGN10.59 billion recorded in the corresponding period of 2025.
Comment: DANGSUGAR’s strong 9M-26 earnings recovery was underpinned by significant margin expansion in H1-26, and lower finance costs, which helped cushion the weaker operating performance in Q3-26. Meanwhile, the successful NGN485.88 billion rights issue drove a 7,506.3% y/y increase in share premium to NGN480.76 billion, materially strengthening the group’s equity position (+241.8% y/y to NGN678.69 billion) and providing greater financial flexibility. Nevertheless, accumulated losses remained elevated at NGN115.49 billion as at September 2026. Looking ahead, a meaningful recovery in volumes across key markets, particularly Lagos and the Northern region, alongside continued cost discipline, will be critical to restoring operating profitability in Q4-26. Additionally, lower borrowing requirements and a more favourable interest rate environment could support further reductions in net finance costs, providing an additional cushion to overall profitability. Our estimates are under review.
