Dangote Sugar Plc has announced a substantial loss of ₦144.01 billion for the first half of 2024, a significant increase from the ₦27.99 billion loss recorded in the same period of 2023. This sharp decline in profitability is attributed to rising costs and challenging market conditions.
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Revenue: The company reported a 45.78% increase in revenue, reaching ₦295.62 billion in H1 2024, up from ₦202.78 billion in H1 2023. Despite this growth, the cost of sales surged by 91.91% to ₦277.49 billion, significantly eroding gross profit.
Gross Profit: Gross profit plummeted by 68.83% to ₦18.14 billion, compared to ₦58.19 billion in the corresponding period of the previous year. The gross margin contracted to 6.1% from 28.7%, reflecting the high cost of goods sold.
Operating Profit: Operating profit fell by 80.22% to ₦10.33 billion, driven by increased administrative expenses, which rose by 32.92% to ₦7.75 billion.
Finance Costs: Finance costs escalated drastically by 158.32%, amounting to ₦234.19 billion, up from ₦90.66 billion in H1 2023. This increase in finance costs, coupled with net finance costs of ₦229.94 billion, severely impacted the company’s bottom line.
Profitability:
The company reported a loss before tax of ₦211.42 billion, a staggering increase of 574.06% compared to the ₦31.37 billion loss before tax in H1 2023. After accounting for a tax credit of ₦67.41 billion, Dangote Sugar ended the period with a net loss of ₦144.01 billion, representing a 414.54% increase from the previous year.
Earnings per Share:
Earnings per share (EPS) fell sharply, with a loss of ₦11.85 per share, compared to a loss of ₦2.30 per share in H1 2023, reflecting a 415.22% decline.
Balance Sheet Analysis:
Dangote Sugar’s total assets grew by 18.95% to ₦714.65 billion as of June 30, 2024, compared to ₦600.79 billion at the end of December 2023. This increase was primarily driven by significant growth in inventories and other assets.
On the liabilities side, total liabilities surged by 49.44% to ₦779.42 billion, up from ₦521.54 billion, driven by a massive increase in borrowings and other liabilities. The company’s total shareholders’ equity turned negative, standing at ₦64.76 billion, down by 181.72% from ₦79.25 billion in December 2023, indicating severe financial strain.
Market Performance:
Dangote Sugar’s share price stood at ₦37.15 as of the report date, with a market capitalization of ₦451.3 billion. The company’s price-to-earnings (P/E) ratio was negative at -3.14x, reflecting the challenging financial performance.
Outlook:
Dangote Sugar Plc faces significant financial challenges, driven by rising costs and an adverse economic environment. The company’s management will need to implement strategic measures to curb losses and restore profitability in the upcoming periods. Investors are advised to monitor the company’s performance closely as it navigates these turbulent times.
