Aliko Dangote’s sugar company confirms price increases months after sugar scarcity controversy

Nigeria’s leading sugar producer Dangote Sugar Refinery Plc has confirmed that sugar price increases grew its revenue by 41.5 percent.

Dangote Sugar Refinery stated in a letter to investors that the company was forced to increase the price of its products in the first quarter to mitigate issues caused by rising inflation, Nairametrics reported.

The company further stated that aside from port congestion and the rise in global sugar prices, the decision to increase prices was driven by the impact of a currency devaluation that spiked inflationary pressures in its operating environment.

In April, BUA Sugar Refinery, another key player in the Nigerian sugar value chain and a top sugar producer behind Dangote Sugar, accused the company of colluding with fellow competitor Flour Mills Nigeria to create sugar scarcity in order to keep sugar prices high.

However, the accusations were swiftly rebuffed by Dangote Sugar Refinery owner and Africa’s wealthiest man Aliko Dangote and Flour Mills Nigeria Chairman John Coumantaros in a letter sent to Nigerian Industry Trade and Investment Minister Niyi Adebayo.

In the letter, Dangote and Coumantaros told the minister that BUA’s investment in the sugar industry does not comply with the regulatory undertakings under the ministry’s Backward Integration Program.

They said the plant was violating the National Sugar Master Plan (NSMP) and operating with impunity, claiming that it must export its products and cannot sell them locally.

Dangote Sugar’s profits in Q1 fail to rise above revenue despite pricing benefits

The growth in Dangote Sugar Refinery’s profit in Q1 2021 was pressured by the high cost of raw materials, energy costs and other input costs due to rising inflation and exchange rate fluctuation. These challenges saw the company’s profit after taxation for the period increase by 30.3 percent to N8.30 billion ($20.24 million).

When compared with growth in revenue, the company’s profit for the first quarter failed to rise above the impressive 41.5-percent surge in revenue to N67.39 billion ($164.37 million), despite strong pricing benefits from the increased sugar prices in the quarter.