Dangote Sugar (Dangsugar)in its H1 2023 results reported a 9.3%y/y growth in Revenue to N202.78bn from N185.46bn in H1 2022.
Its topline performance was driven by growth in sales of sugar (50kg), sugar (retails) and molasses to N194.19bn (+8.3% y/y), N5.86bn (+70.8% y/y) and N1.54bn (+7.9%) respectively in H1 2023 while Freight Income declined by 13.2 y/y to N1.19bn in the period.
Quarterly, the company’s Revenue waned by 1.6% q/q to N100.56bn in Q2 2023 from N102.26bn in Q1 2023 as the realities of inflationary pressures kick in.
The Cost of Sales pared by 9.3% y/y to N144.60bn in H1 2023 from N146.64bn in H1 2022 resulting in a growth of 7.9ppts in its gross profit margin to 30.4% from 22.5%
y/y in H1 2022.
Operating Expenses (adjusted for depreciation) closed the period at N4.66bn (+24.1% y/y) from N3.76bn in H1 2022.
Thus, the company’s OPEX margin settled at 2.3% in H1 2023 from 2.0% in H1 2022. Depreciation and Amortisation was up by 18.0% y/y to N4.90bn from N4.15bn in H1 2022.
The company’s Other Income declined by 51.90% y/y to N145m from N301m in H1 2022 while its Earnings Before Tax (EBIT) surged by 53.0% y/y to N52.20bn in H1 2023 from N34.12bn in H1 2022.
The devaluation of the nation’s currency largely contributed to the jump in the company’s Finance Cost as it came in at N90.66bn from N7.31bn in H1 2022.
The company’s Finance Income of N4.85bn in H1 2023 (+148.9% y/y from N1.95bn in H1 2022) was unable to offset the decline in Net Finance Cost as it closed at N85.81bn in H1 2023 from N5.36bn in H1 2022.
The company’s change in fair value adjustment resulted in an inflow of N2.25bn, a 31.6% y/y growth from N1.71bn in H1 2022.
Overall, Dangsugar reported a Loss Before Tax of N31.37bn compared with a Profit Before Tax of N30.46bn in H1 2022 and a Loss After Tax of N27.99bn in H1 2023 (vs Profit After Tax of N20.97bn in H1 2022).
We have a Hold recommendation on Dangsugar, with a price target of N30.10. Current Price: N30.00/s.