Dangote Sugar Plc has disclosed that its topline growth of 46.1% was supported by an increased average net selling price of 33% to N23,647.5 in 2022 from N17,781.3 during the same period in 2021.
The company’s CEO, Ravindra Singh Singhvi, disclosed this during an earnings call monitored by Nairametrics. He explained that the increase in net selling helped to offset currency adjustment and inflation pressure on the cost of production.
Notable shocks: Singhvi said that notable shocks in the operating environment included changes in global market dynamics fueled by a hike in international prices of raw sugar, FX unavailability, currency adjustment and a high inflation environment which caused an uptick in the cost of production.
- “Rise in cost of raw sugar due to the adverse impact of high FX rates and increase in the international price of raw sugar. Average cost per ton of raw sugar consumed grew 29% year on year (YoY). Increased energy cost on account of hike in gas prices driven by a rise in FX rates, price of gas per scm3 increased by 7% YoY. High cost of plant maintenance caused by a rise in the cost of spares on account of FX fluctuations. Gross Profit, EBITDA and Profit Before Tax (PBT) in 2022 increased above 2021 amidst various challenging factors in 2022, FX and fuel cost,” he said.
He noted that the group is significantly scaling up its investment in the sugar sub-sector in line with the requirement of the Nigeria Sugar Master Plan (NSMP).
Singhvi added that the company was making massive investments in Adamawa State through the expansion of DSR Numan Sugar Refining capacity from 3,000 tonnes of cane per day (tcd) to 6,000 tcd which will bring the total capacity to 9,800 TCD on completion of the upgrade.
Financial performance: The performance indicators were on the upswing as revenue rose by 46%0, from N278.05 billion to N403.25 billion while earnings per share rose from 182 kobo per share to 451 kobo per share, an increase of 269 kobo or 148%.
However, the cost of sales grew by 37.83% from N223.846 billion to N311.282 billion in 2022.
Profit before tax (PBT) increased by N48.28 billion and N47.28 billion for both Group and Company respectively particularly influenced by higher sales revenue.
Profit after tax rose to N54.74 billion, representing an increase of 148% to N32.69 billion compared to N22.05 billion posted in the same period in 2021.
Group’s outlook: Singhvi on the outlook of the group noted that the management will continue the drive to increase its customer base with value-creation activities and partnerships to enhance growth through the bold execution of its various innovative trade initiatives. He said:
- “We would sustain brand awareness in trade through our newly launched retail packaging designs to complement the bulk packaging as we continue to engage and bond with our trade and channel partners.
- Our factory expansion from 3,800 TCD with an additional 6,000 TCD in Numan, to bring the total capacity to 9,800 TCD is still ongoing. Our yield improvement programme and other key initiatives would also be targeted for completion to support the achievement of our performance commitments.
- “Despite these uncertainties, achievement of our Sugar for Nigeria Backward Integration Project goal remains a key priority, though we anticipate an increase in cost to completion in Naira-terms due to the continued impact of the current economic situation on business operations globally. With the approval of the 2nd phase of the sugar master plan implementation, we remain confident of the huge benefits the Backward Integration Programme would deliver and the positive impacts it will have on the economy.”