Earnings Update: Dangote Sugar Refinery Plc FY 2024 & Q1 2025 – Still in the Woods, However Losses Expected to Trim.

Event

Dangote Sugar Refinery plc (“the Group”) faced a challenging operating environment in 2024   , marked by currency volatility, impact of worsening inflationary pressures on volume sales and operating cost, and elevated cost of capital. These macroeconomic headwinds continued to weigh on the Group’s financial performance, resulting in a net loss for the second consecutive year.

Q1 2025 results echoed a familiar narrative, as macroeconomic headwinds persisted, resulting in another net loss for the period.

A silver lining emerged in the FX market, the stability in the market for the most part of the quarter trimmed FX losses to N12.32 billion in Q1 2025, from N121.42 billion in Q1 2024. Although this significant reduction in FX losses was not enough to turn the ride and rescue the Group from a net loss position, it aided a substantial decline in the net loss. Overall, the Group’s net loss narrowed to N23.65 billion, down from N68.99 billion in Q1 2024.

Outlook

For FY 2025, we forecast a 30% revenue growth, fueled by anticipated price increases and potential volume improvements as macroeconomic condition improves.

While we are not optimistic about a rebound to a net profit in FY 2025, we expect a significant narrowing of the net loss to N7.90 billion from N192.62 billion loss in 2024.

Valuation

Based on our expectation for FY 2025, we retain our HOLD recommendation for the stock with a revised fair value of N36.68 (previously: N33.25). This valuation which was derived using a blend of discounted cash flow (DCF), discounted dividend model (DDM), residual income (RIM), and enterprise valuation (EV/EBITDA) methodologies, also reflects our expectation of improved cost efficiency in the medium term, which will enable value creation for shareholders.

Please follow the link “Dangote Sugar Refinery Plc FY 2024 & Q1 2025 – Still in the Woods, However Losses Expected to Trim” to view the whole report. 

Thank you.