The Chief Executive Officer of Dangote Sugar Refinery Plc, Ravindra Singh Singhvi, said imports, currency, and energy costs have increased the company’s cost of sales.
Disclosing this during an interview on Arise TV, yesterday, Mr. Singhvi explained that the company has seen an increase in the cost of sales in recent times due to a few local and international factors. He said:
- “There are a couple of reasons primarily, raw sugar pricing increased in the international market because last year, 2022, crude prices went up. Sugar is also ethanol-led and you know we import sugar from Brazil. Ethanol and sugar have their share of the cane. The prices have been very strong which increased our imports of sugar from Brazil.
- “The depreciation of the Naira has played its role and then 2022 also saw very strong supply chain pressures because of the Russia war and all that. That has also increased our freight costs. For all these reasons, over 95% of our raw materials are import-dependent and that has added to our very high costs as well as energy costs, and currency costs. As our volumes have increased, naturally, the cost of sales will increase.”
Company’s financial performance: The company’s financial report for the year ended December 2022 showed that the cost stood at N311.2 million. Meanwhile, the revenue recorded for the same period was N403 billion.
A further review of the annual report showed that in Lagos State alone, the cost of sales for Dangote Sugar was N127 million while the cost of sales in the Northern part of the country was N143.7 million
The cost of sales in the Western part of the country was N27.1 million and the cost of sales in the Eastern part of the country was N13.6 million. The company’s annual report also showed raw materials as the highest consumer under the cost of sales at N256.3 million
What you should know: Singhvi noted that on a year-on-year basis, Dangote Sugar’s revenue increased by 58% to N178.8 billion in the North, 36.7% increase in Lagos to N173 billion, 36.7% increase in the West to N34.6 billion and 52.9% increase in the East to N16.8 billion.