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.