Dangote Sugar Refinery Q2 2025 – Profitability Within Reach as Headwinds Ease

Event

Dangote Sugar Refinery Plc (“the Group”) posted a revenue of N216.28 billion in Q2 2025, up 25% from N172.90 billion in Q2 2024. The growth represents a normalisation from the exceptional 72% expansion recorded in Q2 2024, which was largely driven by price adjustments following elevated input costs and inflationary pressures.

The 50kg sugar segment remained the main revenue driver, contributing 97% of total sales and rising 25% to N209.39 billion. Revenue from retail sugar and molasses also improved by 22% and 33%, respectively, underscoring sustained demand across product categories. In contrast, freight income declined sharply by 80%, reflecting reduced logistics activity.

Outlook

We expect Dangote Sugar Refinery to sustain its recovery momentum into the second half of 2025, supported by a more stable foreign exchange environment, improved cost control, and steady domestic demand for refined sugar. The sharp reduction in FX losses and cost margin compression in Q2 created a leaner operating structure, which should translate to stronger margins in subsequent quarters, even if revenue growth moderates.

In line with this, we raised our fair value estimate to N65.90 (previously N36.68). At the current market price of N60.00, this implies an upside potential of 10%. Although we recognise the operational turnaround, the valuation already appears to price in most of the near-term recovery as seen in the 25% jump in the price of the stock in Q3 2025. Consequently, we maintain our HOLD recommendation on the stock, pending clearer evidence of sustained earnings growth and lower finance costs.

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