Prominent integrated sugar business, Dangote Sugar Refinery Plc, owned by Africa’s renowned entrepreneur Aliko Dangote, encountered substantial foreign exchange losses exceeding $100 million in the first half of 2023.
These staggering foreign exchange losses, amounting to N83.1 billion ($107.3 million), were a consequence of the devaluation of the Naira.
This devaluation adversely affected the company’s earnings capacity, leading to the revaluation of its foreign currency obligations.
As a result, Dangote Sugar experienced a significant loss of N27.98 billion ($36.17 million) during the first six months of 2023.
This is in stark contrast to the N20.24 billion ($26.2 million) profit recorded in the first half of 2022, when foreign exchange losses amounted to only N1.89 billion ($2.44 million).
Despite a growth in sales and revenue during 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.
While the company’s total assets saw an increase during the same period, rising from N492.43 billion ($638.8 million) at the beginning of the year to N565.98 billion ($734.32 million), its retained earnings experienced a decline, falling from N158.84 billion to N112.64 billion.
In a strategic move aimed at creating value for its shareholders, including Aliko 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 subsidiaries of the Dangote Group.
The proposed merger aims to establish a formidable food conglomerate with a diverse product portfolio, encompassing sugar, rice, salt, vegetable oil, tomato paste, seasoning, and savory products.
This merger is anticipated to herald a significant transformation in Nigeria’s food and consumer goods industry.
The consolidation of these businesses is projected to reshape the market landscape and usher in new growth opportunities, paving the way for a transformative chapter in the country’s economic landscape.