Dangote Sugar Refinery Plc (DANGSUGAR) released its Q2-22 unaudited financials yesterday, in which the company reported a standalone loss per share of NGN3.36 (vs EPS of NGN0.94 in Q2-22), resulting in a loss per share of NGN2.30 for H1-23 (vs EPS of NGN1.67 in H1-22). The higher net finance costs in the period underpinned the loss.
DANGSUGAR’s revenue increased by 10.5% y/y in Q3-22 (H1-22: +9.3% y/y), supported by increases across its 50kg Sugar (+9.3% y/y | 95.0% of revenue), Retail sugar (+95.5% y/y | 3.6% of revenue), Molasses (+43.6% y/y | 0.9% of revenue) business segments. Meanwhile, Freight income (1.2% of revenue) declined by 50.5% y/y. Across its geographical footprint, revenue from Lagos (+20.8% y/y), West (+113.7%) and East (+3.7% y/y) made up for the lag in the Northern region (-13.4% y/y). On a q/q basis, revenue declined by 1.6% y/y, driven by lower 50kg Sugar (-3.2% y/y) sales in the quarter.
Gross margin (+10.99 ppts) expanded to 32.3%, reflecting the sharp increase in revenue and decline in the cost of sales (-4.9% y/y) balance. Consequently, EBITDA (+11.03 ppts) and EBIT (+10.36ppts) margins increased to 31.7% and 29.1% in the quarter, respectively, amid a 28.5% increase in operating expenses.
Net finance costs surged in the quarter, growing by 30.2x the value in the prior quarter, reflecting the effects of the higher exchange rate losses on finance costs following the currency devaluation in June. For context, DANGSUGAR repriced its assets and liabilities to reflect the higher FX rates, hence the sizeable FX loss balance. Meanwhile, finance income grew by 99.3% y/y.
Overall, DANGSUGAR recorded a pre-tax loss of NGN49.90 billion in Q2-23 (vs PBT of NGN16.13 billion in Q2-22). Following a tax credit of NGN9.11 billion, loss after tax printed NGN40.79 billion in Q2-23 (vs PAT of NGN11.37 billion in Q2-22).
