Dangote Sugar Refinery Plc has reported a pre-tax loss of N270.894 billion for the financial year ended December 31, 2024, marking a 148.7% year-on-year (YoY) increase from 2023, despite a significant rise in revenue.
According to its annual report and financial statements reviewed by Nairametrics, the company’s full-year revenue climbed 50.8% YoY to N665.69 billion, primarily driven by higher sales of refined sugar.
Key highlights (2024 vs 2023 FY)
- Revenue: N665.690 billion +50.80% YoY
- Cost of sales: N634.580 billion +78.68% YoY
- Gross profit: N31.109 billion -63.95% YoY
- Selling & distribution expenses: N822 million +27.52% YoY
- Administrative expenses: N18.922 billion +42.48% YoY
- Operating profit: N12.671 billion -82.57% YoY
- Finance income: N7.613 billion -27.91% YoY
- Finance cost: N301.278 billion +49.40% YoY
- Loss after tax: N192.617 billion +161.14% YoY
- Loss per share: N15.86 +161.29% YoY
- Cash and cash equivalents: N108.167 billion -47.17% YoY
- Total assets: N1.051 trillion +74.19% YoY
- Shareholders’ funds: N212.228 billion +167.81% YoY
Key Insights:
Dangote Sugar Refinery Plc’s full-year 2024 results highlight a company struggling with severe cost pressures, rising debt obligations, and escalating losses.
Despite strong revenue growth, profitability remained elusive, with the company posting a significant loss. Below are the key takeaways:
Revenue growth overshadowed by cost escalation
- Revenue continued to be driven by revenue from the sale of sugar, which accounted for over 99% of the total revenue. The company sells both 50kg bags and retail, too.
- However, raw material costs accounting for 86% of the cost of sales remain the primary driver of cost escalation. With cost of sales outpacing revenue growth and consuming 95.3% of total revenue, gross profit plunged by 63.95% to N31.11 billion.
- The shrinking gross profit margin of just 4.7% (down from 18% in 2023) highlights significant cost pressures.
Rising operating and finance costs weigh on profitability
- Operating profit took a further hit, dragged down by rising costs. Administrative expenses climbed to N18 billion, driven by employee costs (>N6 billion), repairs and maintenance (>N3 billion), and management fees (N2.4 billion).
- Finance costs soared by 49.4% to N301.28 billion, largely due to a N209.8 billion exchange loss on letters of credit (+21.32%), which accounted for 69% of total finance costs. Despite a higher average rate of 11.49% p.a. on short-term (30-day) bank deposits up from 5.9% in 2023, interest income on deposits fell 28% to N7.613 billion. This contributed to growth in net finance costs to N293.665 billion.
- Consequently, Dangote Sugar reported a N192.62 billion loss after tax, marking a 161.14% YoY increase. Loss per share surged to N15.86, significantly higher than N6.07 in 2023.
Balance Sheet
- On the liability side, total borrowings skyrocketed by 74% to N717.51 billion, driven by letters of credit loans, which accounted for 56% of the total debt. The increase in commercial paper and other borrowings further contributed to the growing debt profile.
- Despite a sharp rise in retained losses to N126 billion (from a retained profit of N66.8 billion in 2023), shareholders’ funds still grew by 26.04% to N2.175 trillion. This growth was primarily driven by a N325.60 billion revaluation surplus, which provided a temporary boost to equity, masking the impact of mounting losses.
- On the asset side, total assets surged by 74.19% to N1.051 trillion, reflecting an aggressive expansion strategy. However, cash and cash equivalents plunged by 47.17% to N108.17 billion.