Companies operating under the Dangote Group may lose over N15 billion as profit foregone, to the Apapa gridlock in 2018. The Group disclosed this in a document sighted by Nairametrics.
Which firm will lose the most?
Using the foregone profit based on the last two years historical average, Dangote Sugar Refinery may be the biggest loser with an estimated N10.3 billion. Dangote Flour Mills is next with N4.2 billion and NASCON with N900 million as foregone profit.
Using the company’s 2018 estimates, total losses are much higher at N35.8 billion. Dangote Sugar and Dangote Flour could lose N17.5 billion each as profit, while NASCON could lose N800 million.
The group also disclosed that the bad roads in the area affect the companies in two ways.
The gridlock had a negative impact on revenues for Dangote Flour, Dangote Sugar and NASCON as it restricted the company’s ability to move raw materials to production plants, as well as supply finished goods to customers.
The various plants could not operate at optimal operating capacity and suffered higher transport costs due to increased turn around time and extortions encountered.
Shareholders are also affected by the downturn as lower profits means the companies could decide to cut down on dividend payments, going by the company’s Q3 2018 results.
Dangote Sugar which last year paid an interim dividend of ₦0.50 skipped that this year. Q3 2018 EPS of ₦1.07 in 2018, is lower than the N1.43 earned in the corresponding period of 2017.
Earnings per share for Dangote Flour Mill dropped sharply from N2.55 per share in 2017 to N0.65 in 2018.
NASCON’s earnings per share dipped slightly from N2.04 in 2017 to N1.90 in 2018.
The government also loses money as the lower profits mean lower tax payments.
Dangote Sugar is closed yesterday’s trading at N13 on NSE, down N3.35. Dangote Flour closed at N6. NASCON traded at N18 unchanged.