MON, 31 OCT, 2022-theGBJournal| Dangote Sugar Refinery Plc (DANGSUGAR) released its Q3-22 unaudited financials last Friday (28 October), reporting standalone EPS of N0.38 (Q3-21: N0.24); bringing 9M-22 EPS to N2.04 (9M-21: N1.28). The EPS growth was driven by the stellar growth in sales (+61.9% y/y) in the period.
DANGSUGAR’s revenue increased markedly by 61.9% y/y in Q3-22, supported by sturdy increases across all its business segments – 50kg Sugar (+61.5% y/y | 97.5% of revenue), Retail sugar (+92.4% y/y | 2.0% of revenue), Molasses (+60.4% y/y | 0.3% of revenue) and Freight income (+23.5% y/y | 0.2% of revenue).
Across its geographical footprint, DANGSUGAR recorded marked growth in revenue across all its regions – Lagos (+45.4% y/y), North (+65.3% y/y), West (+179.2% y/y) and East (+74.6% y/y). On a q/q basis, revenue grew by 13.0%.
Gross margin (+527bps) expanded to 18.1%, as the faster growth in revenue (+61.9% y/y) masked the increased cost of sales (+52.1% y/y) balance. The higher costs highlight the effects of the increase in key raw materials costs amid inflationary pressures and FX illiquidity issues. Consequently, EBITDA (+637bps) and EBIT (+723bps) margins increased to 17.9% and 15.3% in the quarter, respectively, further buoyed by a 4.7% decline in operating expenses.
Net finance costs (+757.8% y/y) remained elevated, driven by a 677.4% y/y increase in finance costs, with finance income also growing significantly by 406.0% y/y in the period. We attribute the significant rise in finance costs to the exchange rate losses DANGSUGAR recorded. For context, the exchange rate loss as of 9M-22 settled at NGN14.33 billion (FY-21: NGN1.99 billion).
Overall, pre-tax profit grew by 50.2% y/y to NGN6.54 billion in Q3-22. Following a tax expense of NGN1.95 billion, profit after tax (+57.9% y/y) printed NGN4.59 billion in Q3-22.
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