Dangote Sugar’s half-year loss widens fivefold to N144bn on weaker naira

Dangote Sugar Refinery Plc saw its loss after tax widen to N144.01 billion in the first half of this year from N27.99 billion in the same period of 2023.

The company, a subsidiary of Dangote Industries Limited, posted a non-cash FX revaluation loss of N193.7 billion, up from N83.09 billion in H1 2023, according to its earnings report released on Wednesday. 

Its revenue rose 45.8 percent to N295.6 billion.

Ravindra Singhvi, chief executive officer, said their business encountered considerable challenges due to a confluence of soaring inflation, increased borrowing costs, and a further weakening of the currency, which collectively impacted their bottom-line. 

“Despite these obstacles, we achieved a robust revenue growth of 45.8%, reaching N295.6 billion, primarily due to price adjustments implemented in response to heightened cost pressures. However, we incurred a loss after tax of N144 billion, primarily attributable to non-cash foreign exchange losses amounting to N193.7 billion, exacerbated by the significant year-on-year devaluation of the naira. Excluding these foreign exchange losses, our recurring profit after tax stood at N45.2 billion.”

He said to address the challenges posed by currency devaluation, the company has intensified its focus on advancing the Backward Integration Project for sugar production in Nigeria. 

“We have made substantial investments and will continue to expand our local sugar production capacity. DSR is significantly increasing production capacity at its Numan plantation to 9,800TCD, and we are in the process of raising funds for the Nasarawa Backward Integration Project. Despite facing short-term challenges in the first half of the year, we reached a significant milestone in repositioning the business for growth. We successfully established a N200 billion Bond Programme, which is a key element of our broader strategy to support our backward integration plan. In the medium term, the factory will generate 32 megawatts of electricity using new turbines and two high-pressure boilers. It will also enable the production of ethanol and animal feed from by-products like molasses and bagasse. These initiatives are designed to diversify our revenue streams and reduce the risk associated with exchange rate fluctuations,” he added.