Nigeria hopeful of $700m yearly from sugar backward integration
Dangote Sugar Refinery Plc has urged the government to faithfully follow through with the Backward Integration Policy (BIP) in the sugar industry as the nation stands to rake in foreign exchange up to $700millon yearly from Sugar production self-sufficiency.
Chairman of Dangote Sugar Refinery Aliko Dangote while addressing shareholders, at the company’s 15th yearly general meeting held in Lagos recently said, allowing for distortions in the sugar masterplan framework will adversely affect the target of the nation attaining self-sufficiency as projected.
He described the backward integration policy as commendable, which will not only reduce imports of raw sugar but save the nations enormous foreign exchange used for importation.
Dangote expressed delight that the BIP in the sugar industry is going on well, noting that if the national sugar master plan is followed strictly and the players follow the rules, Nigeria will save between $600 million to $700 million yearly as foreign exchange.
He stated that the backward integration policy of the company is recording appreciable progress even as he expressed the company’s commitment to the policy.
Dangote said despite the disruptions in the economy occasioned by the covid-19 pandemic, the company recorded an increase in production volume which rose by 13.7 percent to 743,858 tonnes in the financial year ended December 31, 2020, compared to 654,071 tonnes in 2019.
He stated that the company posted a group turnover of N214.3 billion, 33 percent increase over the N161.1 billion in 2019, while in the same period the Sugar Group also posted 6.9 percent rise in sales volume from 684,487 tonnes in 2019 to 731,701 tonnes in 2020.
Shareholders at the meeting, approved N18.22 billion dividend, translating to N1.50 kobo per ordinary share of 50k each.
Dangote said the improved performance was attributable to operations optimisation strategy despite the disruption caused by civil unrest in the last quarter of the year.
“Our growth continued to benefit from the sustained efforts to drive customer base expansion and several trade initiatives and investments.”
The company’s gross profit increased by 40.4 percent to N53.75 billion, compared to N38.29 billion in 2019 while group profit after taxation for the year increased by 33.2 percent to N26.70.billion against N22.36 billion in 2019, reflecting management’s unrelenting goal to deliver consistent shareholder value.
Dangote said the company has revised its sugar production target to 550,000 metric tonnes achievable by 2024 in line with the revised plan on the BIP by the federal government.
In his remarks, the Group Managing Director/Chief Executive Officer, Ravindra Singhvi, speaking on the results said the sugar group continued the growth path with commitments to improve performance and generate value for all stakeholders.
He explained that this was reflected in the sales volume delivery of 731,701 tonnes, and production of 743,858 tonnes being 6.9 per cent and 13.7 per cent increase in volumes over the comparative year 2019.
He said the company would ensure all hands are on deck to meet the targeted 550,000tonnes projected to be achieved by 2024.
“Our backward integration goal is to become a global force in sugar production, by producing 1.5M MT/PA of refined sugar from locally grown sugar cane for the domestic and export markets.
“Our focus on the implementation of our key strategies in the face of the several challenges posed by the pandemic, the peculiarities of the Apapa traffic situation amongst others we achieved a topline growth in revenue of N214.30 billion, a 33.0 percent increase over 2019; a 53 per cent YOY increase in PBT, and 33.2 per cent increase in PAT.
“2020 was indeed very eventful for our company ranging from the weak macroeconomic fundamentals caused by the underlying impact of COVID-19 pandemic which saw to the steady rise in forex rate, high inflation and the significant rise in our cost of production, to the worsening traffic gridlock on the Apapa Wharf Road which led to delays and at times disruption of the distribution and deliveries to customers.”
He noted that one of the key highlights during the year was the successful completion of the Scheme of Arrangement – a merger of Dangote Sugar Refinery Plc (DSR) and Savannah Sugar Company Limited (SSCL) with effect from September 1, 2020, to operate under one unified entity.
He added, “We are confident the merger will enable us to achieve operational, administrative and governance efficiencies resulting in increased shareholder value.
“We will continue to pursue our Backward Integration Projects, and other key initiatives to grow our sales volumes, market share, optimise cost and operational efficiencies.
Also speaking, the President, Association for the Advancement of the Rights of Nigerian Shareholders, Dr. Farouk Umar commended the management of Dangote Sugar for the impressive performance of the company despite the hiccups in the year 2020.
He said the shareholders expect more robust results next year since the economy is already picking up and for them to have performed excellently under pandemic, then next year will be greater for us all. The leadership of the company has been very wonderful.
Founder, Independent Shareholders Association, Sir Sunny Nwosu said the management of the company has never let the shareholders down for once, noting that “their management style is second to none and that is why the company has been growing steadily.”
He said the way and manner the company has been executing its BIP projects was also commendable as this will afford the company opportunity to meet the target within its projected timelines.