Dangote Sugar Refinery reduces net loss to N10.59 billion

Dangote Sugar Refinery Plc (“Dangote Sugar” or “the Company”) maintained its earnings recovery trajectory through the nine-month period ended September 2025 (“9M 2025”), building firmly on the positive momentum recorded in the first half of the year. The Company reported a sharp reduction in its net loss to N10.59 billion, a remarkable improvement from the N184.36 billion recorded in the corresponding period of 2024. This significant turnaround was driven by a combination of strong topline growth, improved operating margins, and the absence of foreign exchange losses that had weighed heavily on prior results. While the latest figures highlight a notable rebound in underlying business fundamentals, high leverage and tight working capital remain critical areas of concern for the Company.

Revenue Growth and Segment Performance

Dangote Sugar’s revenue surged by 29.27% year-on-year (y/y) to N626.24 billion, up from N484.43 billion in 9M 2024. This impressive performance was largely powered by strong sales of industrial products—particularly the 50kg sugar bags—which rose by 30.15% y/y to N608.81 billion. Despite a mild quarter-on-quarter slowdown in Q3 2025 sales to N196.03 billion from N216.28 billion in Q2, cumulative revenue performance remained resilient and consistent with the Company’s full-year projections. The steady growth trajectory reflects both robust market demand and the Company’s ability to sustain pricing power in a competitive environment.

Cost Management and Margin Expansion

Cost of sales (excluding depreciation) rose by a modest 13.40% y/y to N518.02 billion, highlighting the success of Dangote Sugar’s ongoing cost optimization and procurement efficiency initiatives. As a result, gross profit soared by 291.88% y/y to N108.22 billion, a dramatic improvement from N27.61 billion in 9M 2024. Correspondingly, gross margin expanded to 17.28% from 5.70% in the same period of the previous year, signaling a strong recovery in profitability.

Operating expenses (excluding depreciation) climbed to N18.46 billion from N11.26 billion in 9M 2024, but the pace of growth remained well below that of both revenue and gross profit. This imbalance contributed to higher operating leverage, boosting EBITDA to N89.75 billion, a significant leap from N16.35 billion in 9M 2024. The EBITDA margin strengthened to 14.33%, compared to 3.38% a year earlier, underscoring improved operational efficiency.

However, net interest costs continued to exert pressure, remaining high at N92.24 billion due to the Company’s reliance on short-term borrowings. Encouragingly, the near elimination of foreign exchange losses—which fell sharply from N233.50 billion in 9M 2024 to almost nil in the current period—helped narrow the pre-tax loss to N8.72 billion, a remarkable improvement from the N275.58 billion loss recorded a year earlier. Consequently, the net loss stood at N10.59 billion, representing a 94.25% y/y reduction in losses and marking one of the most substantial year-on-year recoveries in the Company’s recent history.

Balance Sheet Position

Despite the improved earnings profile, Dangote Sugar’s balance sheet remains highly leveraged, reflecting the capital-intensive nature of its operations and its dependence on short-term debt for funding. Net debt rose to N656.34 billion as of September 2025, up from N609.34 billion in FY 2024. The increase was primarily driven by additional short-term borrowings and reduced cash reserves.

The Company’s net working capital position further deteriorated to a negative N421.35 billion, compared to negative N372.84 billion at the end of FY 2024. This was largely attributed to incremental commercial paper issuances totaling N138.82 billion since the beginning of the year, likely aimed at refinancing existing debt obligations and supporting operational liquidity. While this structure has provided short-term flexibility, it heightens refinancing and rollover risks for investors, underscoring the need for more sustainable long-term funding strategies.

Business Outlook

The results for 9M 2025 affirm that Dangote Sugar’s recovery is well underway, supported by strong revenue growth, expanded margins, and disciplined cost management. The Company has successfully stabilized its operations and demonstrated that profitability restoration is achievable even amid persistent macroeconomic challenges.

Nonetheless, cash flow pressures remain a concern, largely due to elevated interest costs and tight working capital cycles. Looking ahead, the near-term performance will depend on Dangote Sugar’s ability to maintain margin improvements, manage debt levels prudently, and potentially achieve a break-even or marginally profitable position by the end of the financial year.

Overall, the Company’s 2025 performance signals a decisive turning point. Dangote Sugar has proven its resilience and operational adaptability in a volatile environment, laying the groundwork for sustained recovery and long-term value creation despite a challenging leveraged balance sheet and liquidity headwinds.