Dangote Sugar Refinery
Dangote Sugar Refinery Plc

Chief Operating Officer (COO) of Dangote Sugar refinery Plc, Ravindra Singh Sighvi has attributed the company’s poor results to smuggling and the bad state of roads leading to the Apapa ports. The COO disclosed this in a note issued to analysts preceding the company’s Q3 2018 investor conference call holding today.

Production and sales during the period under review were greatly impacted by logistic challenges caused by the Apapa traffic gridlock. This constrained the number of trucks required on a daily basis to evacuate the production volumes.

Singhvi also stated that smuggled products now constitute about 40% of sugar sold in the country

The influx of unlicensed sugar, smuggled into the markets nationwide continues to exert a downward pressure on selling prices. The impact of smuggled sugar has taken up about 40% of the market, despite efforts being deployed by regulators to stem the tide.

Results for the third quarter ended September 30, 2018 show revenue fell from ₦163 billion in 2017 to ₦116 billion in 2018. Profit before tax also dropped from ₦39.2 billion in 2017 to ₦29.2 billion in 2018. Profit after tax also declined from ₦26.6 billion in 2017 to ₦16.7 billion in 2018.

Lower dividends may be on the horizon  

Shareholders may be in for a reduced dividend. The company last year paid an interim dividend of ₦0.50 and a final dividend of ₦1.25 per share from an Earnings Per Share of ₦3.13.

The company this year did not pay an interim dividend and its Q3 earnings per share stood at ₦1.07 in 2018, lower than the ₦1.43 it made in 2017.

Share price has also taken a hit

Savvy investors may have perceived this as the stock ended yesterday’s trading on the Nigerian Stock Exchange at a year low of ₦13.8. Year to date, the stock is down 31%. Bearish sentiments on the market could lead to the stock tanking further.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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