Dangote Sugar Refinery (DSR) Plc, a major subsidiary of the Dangote Group posted a half-year profit of N11.6billion in 2020. This is marginally above the N10.9billion profit it generated y/y 2019.
The company has notably posted profit consistently and this time improved its revenue by 28.8% to N103billion for H1 2020 from N80 billion in the corresponding period of 2019.
DSR shows little sign of weariness as it very recently, on July 11, 2020, finalised plans to merge with Savannah Sugar Company Limited. Revenue ascends steadily as well in Q2, as it generated N8 billion higher than the N47.6 billion generated in Q1.
In the analysis of revenue, DSR major turnover emanates from Lagos; one of its 4 segments.
For revenue in 2020, Lagos provided 48.5% whilst the other three segments (North, West and East) combined to 51.5%. This was the trend last year as well, where Lagos made 48.1% of the N80billion generated as revenue.
Obviously Lagos serves as hub for DSR’s operations. After the establishment of DSR as a private liability company in March 2000, its first refinery plant was commissioned a year later in Apapa Lagos.
The aspect of cost has been very worrisome for DSR. Its cost to revenue for 2020 HY is worse off than in 2019. In 2020, cost of sales constitutes 80% of revenue generated with the number pegged at N82.4 billion as opposed to its corresponding HY 2019 where cost of sales amounted to N57.3billion, 73.8% of revenue.
The sad pattern of increasing costs is noticed yet again between Q1 and Q2 2020 when cost to sales ratio moved from 73.3% to 85.4% between both quarters.
Balance sheet and cashflow
DSR presents a very healthy statement of financial position showing total assets of N229billion and total liabilities of N104billion.
It has no major borrowings in its books besides the N2 billion obtained from Zenith Bank in 2016 for a 10-year period and at interest of 9%.
Current ratio as at HY 2020 is 1.3:1, with earnings per share appreciating by 5.5% to stand at 97kobo.
Net cash obtained from operating activities notably showed an 87% increase from N5.9billion in HY2019 to N46billion in 2020.
The consumer goods sector seemingly faces very mild reactions from its consumer and their demand pattern in this COVID-19 era unlike other industries. Revenue on the contrary continues to soar. The outlook for the remaining quarters of the year looks positive and quite promising for Dangote Sugar if proper attention is paid to the rising costs.