MON, JULY 31 2023-theGBJournal |Dangote Sugar Refinery Plc (DANGSUGAR) grew its revenue by 10.5% y/y in Q3-22 (H1-22: +9.3% y/y), even as it reported a pre-tax loss of N49.90 billion in Q2-23 (vs PBT of N16.13 billion in Q2-22).
And following a tax credit of N9.11 billion, loss after tax printed N40.79 billion in Q2-23 (vs PAT of N11.37 billion in Q2-22).
As witnessed in the results of non-financial companies operating in Nigeria, DANGSUGAR’s profitability was unavoidably hampered by the effects of the FX liberalization policy in June.
The company’s unaudited financials published Sunday also shows that the revenue growth is supported by increases across its 50kg Sugar (+9.3% y/y | 95.0% of revenue), Retail sugar (+95.5% y/y | 3.6% of revenue), Molasses (+43.6% y/y | 0.9% of revenue) business segments.
The company reported a standalone loss per share of N3.36 (vs EPS of N0.94 in Q2-22), resulting in a loss per share of N2.30 for H1-23 (vs EPS of N1.67 in H1-22).
The higher net finance costs in the period underpinned the loss.
Meanwhile, Freight income (1.2% of revenue) declined by 50.5% y/y. Across its geographical footprint, revenue from Lagos (+20.8% y/y), West (+113.7%) and East (+3.7% y/y) made up for the lag in the Northern region (-13.4% y/y). On a q/q basis, revenue declined by 1.6% y/y, driven by lower 50kg Sugar (-3.2% y/y) sales in the quarter.
Gross margin (+10.99 ppts) expanded to 32.3%, reflecting the sharp increase in revenue and decline in the cost of sales (-4.9% y/y) balance. Consequently, EBITDA (+11.03 ppts) and EBIT (+10.36ppts) margins increased to 31.7% and 29.1% in the quarter, respectively, amid a 28.5% increase in operating expenses.
Net finance costs surged in the quarter, growing by 30.2x the value in the prior quarter, reflecting the effects of the higher exchange rate losses on finance costs following the currency devaluation in June.
For context, DANGSUGAR repriced its assets and liabilities to reflect the higher FX rates, hence the sizeable FX loss balance. Meanwhile, finance income grew by 99.3% y/y.
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