Dangote Sugar Refinery Plc growth EPS to 46.1% year on year… to pay NGN1.50 dividend

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Dangote Sugar Refinery Plc released its 2022Full Year audited financials, report EPS growth to NGN4.51 2021Full Year compare with NGN1.82 last year. The report further noted that EPS growth was driven by the stellar growth in sales to 46.1% year on year and a decline in net finance costs to34.3% year on year in the period. However, the EPS outturn surpassed our estimate to NGN2.87 by 57.1%, owing to a positive surprise in net finance costs. The board proposed a dividend of NGN1.50/s, which implies a yield of 8.5% on the last closing price of NGN17.60  on March 1, 2023.

According to analyst at Cordros Research said the company’s revenue increased markedly by 46.1% year on year in 2022Full Year, supported by the stellar increases across its business segments – 50kg Sugar (+45.3% year on year | 97.0% of revenue), Retail sugar (+65.9% year on year | 2.0% of revenue), Molasses (+80.4% year on year | 0.5% of revenue), and Freight income (+111.6% year on year | 0.6% of revenue).


The report also disclosed that across its geographical footprint, DANGSUGAR recorded marked growth in revenue across all its regions – Lagos (+36.7% year on year), North (+58.0% year on year), West (+36.7% year on year) and East (+52.9% year on year) respectively. A further perusal of the numbers reveals a significant growth in Q4-2022 in revenue to 42.7% year on year to its highest ever print, driven by the festive induced demand typically associated with the end of the year.

His of the opinion that gross margin of 462bps expanded to 22.8%, following the faster growth in revenue of 46.1% year on year shows relative to cost of sales to 37.8% year on year.


“We highlight that the bulk of DANGSUGAR’s cost pressures emanated from the increase in input costs to 39.8% year on year amid inflationary pressures and FX illiquidity issues, said analyst. Consequently, EBITDA grew by 536bps and EBIT grew by 630bps in margins increased to 22.9% and 20.4% in the period, respectively, further buoyed by a 4.2% year on year decline in operating expenses.

“Net finance costs outturn was the biggest surprise of the results in our view, as it declined by 34.3% year on year.

We highlight that the decline was driven by significant spikes in the finance income to 4.5x year on year and fair value adjustment to 15.6x year on year lines, amid a 47.9% year on year increase in finance costs. According to him the significant expansion in finance income is attributable to the increase in interest income on deposits in the 2022Full Year to NGN6.38 billion in 2021Full Year compare with NGN1.42 billion.



He continues saying on the fair value adjustment, we note an increase in (1) total cane plantation to 8,092 ha 2021 Full Year to 7,350 ha, and (2) industry out-grower assumed price per ton to NGN17,874 (2021Full Year to NGN12,502. Notably, exchange rate loss which was a key sticking point across the year declined by 5.0% year on year to NGN1.89 billion in 9 Months in 2022 from NGN14.33 billion in 2021Full Year compare with NGN1.99 billion.

“Overall, pre-tax profit grew by 141.9% year on year to NGN82.30 billion in 2022Full Year. Following a tax expense of NGN27.56 billion (Effective tax rate: 33.5%), profit after tax printed NGN54.74 billion in 2022Full Year.

Comment: Analyst said 2022Full Year performance of the company was in line with their expectations highlighting the food producer’s resilience amid headwinds such as consumers’ price sensitivity, FX illiquidity, inflationary pressures and structural inefficiencies. Market reaction to the results have been positive as the stock is currently up by 9.9%, he added.

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