Dangote Sugar Plc will be paying a dividend of 40 kobo per share this week following the conclusion of its AGM. The dividend is 33 percent lower than the 60 kobo it paid a year earlier. The share price has also suffered throughout this period dropping from its lofty highs of N10+ to as low as N5.10 within the last 12 months. The Chairman of the company, Alhaji Aliko Dangote explained the reason at the recently concluded AGM.
“In view of the significant investments required for our backward integration projects, the company is in need of additional funding. As such, the Board has taken the decision to reduce dividend payment for the year from 60 kobo per share to 40 kobo.
“This is a transitional situation, requiring our short-term sacrifices in order to build for the future, and is necessary for us to maintain prudent capital and liquidity levels to sustain our operations, in tandem with our backward integration projects.”
So basically, the reason for the 33 percent drop in dividend payment was due to the need to retain some profits as the company badly needed to augment its capital. At this rate, it thus suggest the company might be planning to increase its capital either via equity or debt. Dangote Sugar has no debts and had about N43 billion in retained earnings out of which N6billion was cash.