Abiodun JIMOH
Dangote Sugar Refinery Plc has faced intensified sell pressures, plunging its market value to ₦394.773 billion, a staggering 64% discount from its 52-week high. Despite a Santa Claus rally in the Nigerian equities market, bearish sentiments persisted for the company as investors exited their positions en masse.
Opening the week at ₦35 per share, Dangote Sugar closed at ₦32.50 on Friday, reflecting the market’s skepticism about its profitability amidst significant financial challenges. The refinery has been burdened by its heavy exposure to foreign exchange liabilities, which severely impacted its earnings performanc
For the first nine months of the 2024 financial year, Dangote Sugar reported a net loss of ₦184.4 billion, representing a 582% increase from the ₦27.07 billion loss recorded in the same period in 2023. While revenue surged by 56.4% year-on-year to ₦484.4 billion, the company faced skyrocketing costs of goods sold, which rose by 89.6% to ₦464.6 billion. The increase was driven by a 100% spike in raw material costs and higher overhead expenses.
Operating profit plunged by 86% during the period, while operating expenses rose by 28.5%. Finance costs surged by 157%, driven by foreign exchange losses and higher interest on commercial papers. As a result, the company’s pretax loss widened by 556.9% to ₦275.6 billion.
A ₦91 billion tax credit provided some relief, reducing the net loss to ₦184.4 billion. However, investor confidence remains shaky, with the market reflecting doubts about the company’s ability to navigate its current challenges.
The continued sell pressure on Dangote Sugar highlights investor concerns over its exposure to volatile foreign exchange markets and escalating production costs, signaling tough times ahead for the sugar giant.
