Dangote Sugar Refinery has reported a significant loss of N184.4 billion for the nine months ending in September 2024, largely driven by a 176% surge in finance costs during the review period. This contrasts sharply with an after-tax loss of N27.03 billion recorded in the same period of 2023.
Analysis indicates that finance costs soared to N300.2 billion in the first nine months of 2024, up from N108.7 billion a year earlier. Meanwhile, the company’s financial income decreased slightly to N6.93 billion from N7.24 billion, resulting in a net finance cost of N293.2 billion, compared to N101.5 billion in the previous year.
Despite the financial challenges, revenue increased to N484.4 billion from N309.7 billion during the same period. However, total assets grew to N667.6 billion, while total liabilities rose significantly to N772.7 billion from N490.6 billion.
The company experienced a negative cash flow from operating activities amounting to N267 billion, a sharp decline from a positive cash flow of N8.53 billion in the prior year. Additionally, net cash used in investing activities also worsened, moving to a negative N21.1 billion from a negative N5.78 billion. Conversely, net cash from financing activities turned positive at N204.2 billion, improving from a negative N18.4 billion.
Earnings per share fell deeper into negative territory, at N15.18 per share compared to negative N2.22 per share during the comparable periods. Between May and August 2024, Dangote Sugar’s stock price dropped by 18.67%, from N45.00 to N36.60, attributed to supply chain disruptions and fluctuating sugar prices impacting the company’s performance.
In a strategic move to bolster its finances, Dangote Sugar Refinery has initiated the offering of its Series 1 Commercial Paper (CP) of up to N50 billion, which opened on February 22 and will close on February 27, 2024. This CP, with a tenor of 266 days and a discount rate of 15.9188%, is part of a broader N150 billion Commercial Paper Issuance Programme, expected to be repaid from the company’s cash flows. The issuer has received a “Baa3.ng” rating from Moody’s.
As Sub-Saharan Africa’s largest sugar refinery, Dangote Sugar holds a market share of approximately 55% in the retail space and aims to enhance its production capacity through backward integration and expansion of its sugar plantations, targeting an annual production of 1.5 million metric tonnes of refined sugar in the medium term.