Losses have multiplied more than five times for Dangote Sugar Refinery over the first two quarters of the 2024 financial year, hitting N144 billion at the half year. The loss figure is nearly twice the full-year net loss of N73.8 billion the company posted in 2023, which has punctured and submerged equity funds.
Losses grew from N69 billion in the first quarter to N75 billion in the second quarter, as production cost rose twice ahead of sales and foreign exchange losses continued to swell.
The half-year interim financial report of the sugar-producing company at the end of June 2024 shows persisting operating pressure from the top to the bottom lines.
Cost and income imbalance got extended in the second quarter with sales growing by less than 72 per cent year-on-year to roughly N173 billion against a 140 per cent advance in cost of production to N163.5 billion. That slashed gross profit for the quarter by 71 per cent to N9.4 billion and operating profit nosedived by about 83 per cent to N5 billion.
Net finance cost of N109 billion easily consumed the operating profit and created a pre-tax loss of N104.6 billion for the company in the second quarter. A tax credit of N29.5 billion lowered the net loss figure to N75 billion for Dangote Sugar Refinery for the second quarter of operations.
The company’s half-year operating story is a mix of a bad first quarter and a worse second quarter that paints a gloomy outlook of a mega loss for the year. Cost increases outstripping revenue growth is the company’s challenge.
At N295.6 billion, half-year sales revenue is up by 45.8 per cent year-on-year but input cost rose twice as fast at almost 92 per cent to N277.5 billion over the same period. The cost of producing the naira of sales rose from 71 kobo in the same period last year to about 94 kobo at the end of June 2024. The result is a fall in gross profit from N58 billion to N18 billion over the period.
Operating profit also fell by 80 per cent to a little over N10 billion, which disappeared into a net finance cost of almost N230 billion at half year.
Largely foreign exchange losses of N193.7 billion, finance expenses grew by over 158 per cent year-on-year to N234 billion –already above the N201.6 billion finance cost the company incurred for the 2023 full year.
The company ended half-year operations with a pre-tax loss of N211.4 billion, close to seven times the pre-tax loss figure of N31.4 billion in the same period last year.
A tax credit of N67.4 billion cut the net loss figure to N144 billion at the end of half-year operations in June 2024.
The loss erased the company’s entire equity capital of over N79 billion at the end of last year, and created negative shareholders’ funds of N64.8 billion at the half year, the amount by which total liabilities exceeded total assets.
The company is financing its negative equity with new borrowings in the region of N167 billion and a pile-up of trade and other payables that have climbed to over N572 billion at the half year.
Micheal has over 5 years experience in digital journalism. He’s a New Media Expert with an interest in Human Development and Global Politics.
