WorldStage Newsonline– Dangote Sugar Refinery Plc (Dangsugar) has released its second quarter 2024 (Q2-24) unaudited financials with a pre-tax loss of N104.56 billion in from a pre-tax loss of N49.90 billion in Q2-23 while loss after tax grew by 83.89% to N75.01 billion from loss after tax of N40.79 billion in Q2-23.
Dangsugar’s revenue increased by 71.9% y/y in Q2-24 (H1-24: +45.8% y/y), supported by increases across its 50kg Sugar (+197.5% y/y | 96.1% of revenue), Retail sugar (+140.0% y/y | 2.9% of revenue), Molasses (+190.7% y/y | 0.9% of revenue) business segments.
Meanwhile, freight income (0.1% of revenue) declined by 52.3% y/y. Revenue growth was also observed across all geographic regions: Lagos (+250.4% y/y | 60.9% contribution), North (+141.5% y/y | 27.9% contribution), West (+119.5% | 8.1% contribution) and East (+122.1% y/y | 3.1% contribution).
The revenue expansion in the period was primarily due to price increases in response to rising cost pressures. On a q/q basis, revenue grew remarkably by 40.9% y/y, driven by higher 50kg Sugar (+143.0% y/y) sales in the quarter.
Gross margin declined by 268bps y/y to 5.4%, reflecting the sharp increase in the cost of sales (+140.0% y/y) relative to revenue (+71.9% y/y).
A detailed analysis of the cost line shows significant increases in raw materials (+146.1% y/y | 86.3% of cost of sales) and direct overheads (+121.3% y/y | 7.6% of cost of sales), due to the high inflationary environment and naira devaluation.
Consequently, EBITDA (-322bps y/y) and EBIT (-262bps y/y) margins contracted to 4.8% and 2.9% in the quarter, respectively, amid a 37.3% increase in operating expenses.
Net finance costs grew by 36.1% y/y to N109.31 billion in the quarter (Q2-23: N80.33 billion), due to a 35.2% y/y increase in finance cost.
The higher finance cost was primarily due to a 15.2% y/y rise in FX losses and a 256.3% y/y surge in interest expenses on letters of credit.
Meanwhile, the group reported a standalone loss per share of N6.17 against a loss per share of N3.35 in Q2-23, resulting in a higher loss per share of N11.85 for H1-24 from N2.30 in H1-23.
The elevated costs of sales (+140.0% y/y) and higher net finance cost (+36.1% y/y) in the period underpinned the loss.
