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Company Results

Dangote Sugar Refinery: Revenue soars amid rising cost of sales

In the analysis of revenue, DSR major turnover emanates from Lagos; one of its 4 segments.

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Aliko Dangote rallies private sector operators against COVID-19, 10 fantastic things Aliko Dangote has done in the last 10 years

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.

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In the analysis of revenue, DSR major turnover emanates from Lagos; one of its 4 segments.

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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.

READ: Cadbury releases 2019 FY result, grows profit by 26%

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Cost

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.

READ: Border closure boost sales and profits for Nigeria’s Agroproducers

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%.

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Current ratio as at HY 2020 is 1.3:1, with earnings per share appreciating by 5.5% to stand at 97kobo.

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READ: No trophy for International Breweries after bland Q2 results

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.

Ekene Onyeama is a Chartered Accountant currently plying one of the Tier one Banks in Nigeria. He started out his career at Ideascorp Limited, a private company in the hospitality industry where he served as the accountant before switching to banking. Ekene enjoys analyzing companies. He likes to write and is very excited by company valuations. He can be reached on Twitter @Ekenergy_

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Company Results

Flour Mills reports N9.9 billion profit in HY 2020/21

The increase in profit before tax was largely driven by the agro-allied segment, which generated a profit of N6.3 billion compared to a loss the previous year.

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Flour Mills Nigeria, announced its unaudited 2020/21 half-year financial results today, showing continued growth with a Profit after Tax of N9.9 billion for the six months ended 30th September 2020.

This information is contained in the press release by the Group, which is in line with Flour Mills’ Half-year 2020/21 financial statement.

What you should know

  • Flour Mills’ revenue was N355.1 billion, compared to N270,8 billion in H1 2019/20.
  • The Group’s profit before tax was N14.6 billion, compared to N8.6 billion in H1 2019/20. The increase in profit before tax was largely driven by the agro-allied segment, which generated a profit of N6.3 billion compared to a loss the previous year.
  • The agro-allied segment saw very strong improvement in the edible oils and fats, protein, and fertilizer businesses, following the investments over the last few years.
  • The Group’s profit after tax was N9.9 billion, compared to N5.9 billion in H1 2019/20.
  • FMN continued to show sustained growth in key segments driven by the closure of the Nigerian border since August 2019.

Operational review

Despite prevailing economic headwinds, the Group continued to show sustained growth in key segments driven by the border closure since August 2019.

As the FMN key segment continues to capitalize on this development due to the strategic placement of the Group’s business in the industry.

This development led to a strong performance in edible oils and proteins supported by agro-inputs (fertilizer) and agro-distribution and aggregation structures.

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In line with FMN’s growth strategy, the edible oils and fats value chain saw a significant year-on-year increase of 32% in volume, turning in a profit when compared to the loss in H1 2019/20.

However, volumes for the protein value chain also increased by 18% year-on-year, while the starch value chain was up by 31% year-on-year.

What they are saying

Commenting on the result, Paul Gbededo, the Group Managing Director /CEO, stated; “With this result, our business has once again shown resilience, by following the path of sustainable growth despite the prevailing challenges in both the local and global economy.”

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He further assured that “in line with our vision to continue to grow value for our investors, Management will for the remaining part of the financial year continue to concentrate on improving operational effectiveness through accelerated strategies for Group-wide cost optimization, which will ensure sustainability in the current market climate, while we continue to invest in growing the business further.”

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Company Results

SET Plc recorded N14.4m post-tax loss in Q3 2020

Secure Electronic Technology Plc (SET Plc) recorded a post-tax loss of N14.4 million in Q3 2020.

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Gaming

Secure Electronic Technology Plc (SET Plc) recorded a post-tax loss of N14.4M in Q3 2020, triggered by a high dealer’s commission. 

A cursory analysis of the Q3 2020 results of Secure Electronic Technology Plc (SET Plc) indicates that the Q3 2020 post-tax loss reduced by 33.7% from N21.7M in the same quarter last year. 

READ: For SET Plc, failure in lottery shifts focus to online gaming

Highlights 

  • Revenue increased by 1.0% 
  • Prizes/winnings increased by 0.52% 
  • Dealers commission increased by 3.42%    
  • Net income decreased by 14.71% 
  • Administrative expenses decreased by 21.21%  
  • Operating loss decreased by 34.62% 
  • Financial charges increased by 68.23% 

READ: MTN: Data subscriptions triggered surge in Q2 2020 Revenues

What you should know

  • A cursory analysis of the latest results of the company reveals that revenues generated from lottery sales and gaming products increased by 1% in Q3 2020 relative to Q3 2019despite COVID-19 pandemic disruptions that have affected revenues of most businesses worldwide.
  • YoY, revenue decreased by 2.15% from N3.18B in 2019 (9-months) relative to N3.11B in 2020 (9-months) – indicating that COVID-19 might have impacted the activities of the company, when considered on a yearly basis.   
  • While the company was able to increase revenues by 1%, reduce its operating loss by 34.62%, and reduce its administrative expenses by 21.21%; high dealers commission and administrative expenses as well as finance charges which increased by 68.23% contributed to the post-tax loss recorded.  
  • Dealers commission and administrative expenses constitute a drag on the company’s profitability. Dealer’s commission was 36.12% of revenues in the period under consideration while prizes/winnings were 60.35%. Administrative expenses was 137.16% of net income in the quarter under consideration. 
  • The post-tax loss is an indication that there was no distributable profit. Thus, the Earnings Per Share (EPS) of the company would be a deficit; so that Q3 2020 EPS was –0.26 kobo.  

READ: Infinity Trust Mortgage Bank Plc suffers 2.21% drop in Q3 revenues

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The shares currently trade at N0.20 per unit. The highest price for a unit of share in 52 weeks was N0.20 and the lowest N0.20, indicating that the share price of the company has been stable. A total of 20,212 units was sold in the last seven days trades. Shares outstanding is 5.63 billion units and its market capitalization as at close of business Friday 16th October 2020 was N1.13 billion. 

Interlinked Technologies Plc operates in the same sub-sector as SET Plc – SpecialityIts share price is N2.91. The highest price for a unit of share in 52 weeks was N2.91 and the lowest N2.91 – indicating that the share price of the company has been stable. A total of 141,020 units was sold in the last seven days trades. Shares outstanding is 236.7 million units and its market capitalization as at close of business Friday 16th October 2020 was N688.80 million 

READ: Pharmaceuticals: Pharma-Deko’s revenue declines by 49.4% in H1 2020

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Background

Secure Electronic Technology Plc (SET Plc), formerly known as National Sports Lottery was incorporated in 2000 with an exclusive 30-year license granted by the FG to operate the National Lottery in Nigeria.

SET Plc started out as a gaming/lottery company. While online gaming remains a major part of its operationsAside from lottery and gaming, the company now explores other business areas within the ambit of technology and data management. 

READ: SAHCO suffers 92% decline in profit, as travel restrictions bite harder

Today, the company is involved in the vending of airtime, provision of card payment solutions, trivia promo syndication, provision of central database and information processing services, as well as treasury/asset management services 

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Company Results

Presco Plc projects N24.53 billion turnover in Q4 2020

Presco’s forecast is coming amid the negative economic impacts of the coronavirus pandemic.

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Presco Plc has projected an 82.03% rise in Profit after Tax to N6.99 billion in Q4 2020, up from N3.84 billion in Q4 2019. Also, its projected turnover of N24.53 billion indicates a 24.39% increase when compared to the N19.72 billion made in Q4 2019.

The Earnings Forecast sent to the Nigerian Stock Exchange (NSE) today, estimated the Gross Profit to be N14.18 billion and the Profit before Tax to be N9.13 billion.

This forecast is coming amid the negative economic impacts of the coronavirus pandemic. It is generally expected that the firm should have downgraded their earnings and profitability forecasts, but renewed optimism based on the reopening of the economy and growing demands for consumer goods have been factors that influenced the projections.

Backstory

Presco Plc had earlier held its Annual General Meeting, with the unaudited accounts for the tQ3 2020 ended September 30, 2020, were deliberated upon among other resolutions.

What you should know

Presco Plc is a fully-integrated agro-industrial establishment with oil palm plantations, palm oil mill, palm kernel crushing plant, and vegetable oil refining plant. They produce specialty oil and fats.

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