Dangote Sugar Refinery Plc, a leading integrated sugar business owned by one of Africa’s wealthiest individuals, Aliko Dangote, faced substantial foreign exchange losses amounting to more than $100 million in the first half of 2023.
The staggering N83.1 billion ($107.3 million) in foreign exchange losses were attributed to the devaluation of the Naira, which adversely affected the company’s earnings capacity and necessitated the revaluation of its foreign currency obligations.
This pressure on earnings resulted in a significant loss of N27.98 billion ($36.17 million) during the first six months of 2023. This contrasts sharply with the N20.24 billion ($26.2 million) profit posted in the first half of 2022 when foreign exchange losses were only N1.89 billion ($2.44 million).
Despite recording an increase in sales and revenue for the first half of 2023, with revenue rising from N185.45 billion ($240.6 million) to N202.78 billion ($263.1 million), Dangote Sugar’s profit was heavily impacted by the foreign exchange losses.
The company’s total assets grew during the same period, increasing from N492.43 billion ($638.8 million) at the beginning of the year to N565.98 billion ($734.32 million). However, its retained earnings experienced a decline, falling from N158.84 billion to N112.64 billion.
In a strategic move aimed at unlocking value for its shareholders, including Dangote, who holds a 72.7-percent stake in the company, Dangote Sugar announced plans for a proposed merger with Nascon Allied Industries Plc and Dangote Rice Limited, both of which operate under the umbrella of Dangote Group.
The proposed merger aims to create a formidable food conglomerate boasting a diverse product portfolio, including sugar, rice, salt, vegetable oil, tomato paste, seasoning, and savory products.
This merger is expected to signal a significant shift in the Nigerian foods and consumer goods industry. The consolidation of these businesses is projected to reshape the market landscape and usher in new growth opportunities, setting the stage for a transformational chapter in the country’s economic landscape.
