Dangote Sugar, symbolized as Dangsugar, has unveiled its H1 2023 financial results, showcasing a robust year-on-year revenue surge of 9.3%. The company’s revenue reached N202.78 billion, marking a substantial increase from N185.46 billion recorded in H1 2022.
This impressive growth in revenue was fueled by the sales of various sugar products, including the 50kg and retail formats, alongside molasses, which contributed N194.19 billion (+8.3% YoY), N5.86 billion (+70.8% YoY), and N1.54 billion (+7.9%) respectively during H1 2023. However, there was a minor setback in Freight Income, which experienced a 13.2% year-on-year decline, reaching N1.19 billion during the period.
Breaking down the performance on a quarterly basis, Dangote Sugar encountered a slight dip in revenue of 1.6% quarter-on-quarter, with figures sliding to N100.56 billion in Q2 2023 from N102.26 billion in Q1 2023. This contraction can be attributed to the impact of inflationary pressures that have begun to make their presence felt.
Notably, Dangote Sugar managed to reduce its Cost of Sales by 9.3% YoY, amounting to N144.60 billion in H1 2023 compared to N146.64 billion in H1 2022. This optimization strategy led to a substantial enhancement in its gross profit margin, which expanded by 7.9 percentage points, settling at 30.4% in H1 2023 as opposed to 22.5% in H1 2022.
Operational Expenses (adjusted for depreciation) concluded the period at N4.66 billion, reflecting a noteworthy increase of 24.1% YoY from N3.76 billion in H1 2022. Consequently, the company’s OPEX margin experienced a marginal uptick, moving from 2.0% in H1 2022 to 2.3% in H1 2023. Depreciation and Amortization also rose by 18.0% YoY, reaching N4.90 billion in H1 2023 in comparison to N4.15 billion in H1 2022.
Dangote Sugar faced a decline of 51.90% YoY in its Other Income, which amounted to N145 million in H1 2023, down from N301 million in H1 2022. However, the company’s Earnings Before Tax (EBIT) experienced a remarkable surge of 53.0% YoY, reaching N52.20 billion in H1 2023, contrasting with N34.12 billion in H1 2022.
The company’s financial dynamics were significantly influenced by the devaluation of the national currency, as evidenced by the substantial rise in its Finance Cost. This figure surged to N90.66 billion in H1 2023, a significant increase from N7.31 billion in H1 2022. Conversely, Dangote Sugar’s Finance Income saw a notable growth of 148.9% YoY, reaching N4.85 billion in H1 2023, compared to N1.95 billion in H1 2022. Unfortunately, this increase was insufficient to counterbalance the decline in Net Finance Cost, which closed at N85.81 billion in H1 2023 from N5.36 billion in H1 2022.
The company’s alteration in fair value adjustment resulted in a noteworthy inflow of N2.25 billion, demonstrating a solid 31.6% YoY growth from N1.71 billion in H1 2022.
In summary, Dangsugar reported a Loss Before Tax of N31.37 billion for H1 2023, a stark contrast to the Profit Before Tax of N30.46 billion in H1 2022. Similarly, the company experienced a Loss After Tax of N27.99 billion in H1 2023, compared to a Profit After Tax of N20.97 billion in H1 2022.
With the current price standing at N30.00/s, we maintain a Hold recommendation on Dangsugar, with a target price of N30.10.
