Dangote Sugar Plc has released its FY 2021 results revealing a profit of N22.05 billion, representing a 26% decline from 2020 with revenue at N276 billion.
Despite an inflation ridden year which ushered in the increase in prices of commodities and services, the company was able to increase its sales by 28% from N214 billion in the previous year. Most FMCGs were able to record improved sales on the back of inflationary pressures during the period and Dangote Sugar, which refines and produces sugar, an everyday commodity, was not left out.
However, bottomline profit was greatly subdued by high production costs and other expense line items.
Key highlights of the result
- A cursory view of the result shows that the company’s revenue was driven by impressive sales in the company’s segments classified by geographical areas, Lagos, North, West and East. The segments combined delivered a revenue of N276 billion in the full-year period compared to N214 billion in the same period of 2020.
- The company recorded higher sales growth in the Northern region, compared to other segments. Revenue growth from the North, was at 42% year on year, generating a total of N113 billion. Lagos sales generated N126 billion, 21% growth y-o-y. While revenue from the West and East was N25 billion and N11 billion, respectively, both reporting a 24% and 11% increase.
- Also, the company’s revenue line is broken into sales of sugar (50kg and Retail) and molasses. Dangote sugar generates 97% of its revenue from the sale of 50kg sugar, suggesting that the 50kg sugar is the company’s major income stream.
- Although the company increased its marketing expenses which was a contributor to the growth in revenue, the company’s full-year bottomline profit performance was affected by high costs of sales, driven by increase in cost of materials and as well as freight expenses, during the period.
- The company also makes money from interest income on bank deposits, as well as other income lines.
- A further look at the financial results showed that the company’s long-term borrowings were reduced to N764 million. Total assets are now at N360 billion, as net assets increased marginally by 3% to N129 billion.
Comments on performance indicators
- Group revenue increased 28.8% in the year to N276.50 billion (2020: N214.30 billion) on the heels of strong growth trajectory recorded in the prior quarters.
- Gross profit however, decreased 12.3% in the year to N50.21 billion (2020: N57.22 billion) because of the continued rise in cost of production witnessed during the year under review, occasioned by inflationary pressure, rising cost of key raw materials and impact of foreign currency devaluation.
- EBITDA decreased 16.4% in the year to N48.05 billion (2020: N58.03 billion) on the back of elevated cost pressure. Group profit after taxation decreased 26% to N22.05 billion (2020: N29.78 billion) additionally impacted by higher finance cost.
- Group sales volume increased 5.7% in the year to 773,341 tonnes (2020: 731,701 tonnes). Growth in the year supported by the positive market responses to key trade interventions introduced during the year.
- Group production volume also increased 9.2% in the year to 811,962 tonnes (2020: 743,858 tonnes) on the strength of improved operational efficiency despite the adverse impact of the perennial Apapa traffic gridlock situation.
Dangote Sugar Refinery Plc earnings per share for the period declined to N1.82 from N2.45.
The company last traded at N16.90 per share and has declined by 2.87% from year-to-date.
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