“The revenue fall down if you look at it closely is actually as a result of the international sugar prices that have gone down by more than 20 per cent,” Abdulahi Sule, Managing Director, Dangote sugar refinery told CNBC Africa.
According to Sule, the fact that their revenues declined by only 4.4 per cent despite the drop in international prices is positive news as they sold more this year in terms of volumes. The sugar refinery saw revenues decline 4.4 percent to 77.7 billion naira while profits for the year rose by 17.8 percent to 9.6 billion naira.
“We sold over 20 per cent more than what we sold last year, so we have seen an increase in that. We have seen a huge increase in terms of efficiency within the refinery. What we consider realization, is the yield that we have from the sugar production that is to be able to extract more. So we have moved in from somewhere around 94 and 95 per cent to somewhere around 97 per cent,” he explained.
The sugar refinery which ranks amongst Africa’s largest sugar refineries, maintains 70 per cent market share and by lowering their prices, they were able to stop all the smuggled sugar that came into the country.
“As a result of taking out the smuggling sugar, we have now seen improvement in the market in consumption throughout the country so we’ve had a little increase in terms of market share,” he said.
The company recently moved into the retail space with the introduction of small and affordable packs of sugar and has seen demand rise in both industrial and retail sectors.
“Industrial demand mostly is as a result of low sugar prices. Sugar prices have come down from somewhere around 30 cents per pound down to somewhere around 17 cents per pound.”
According to Sule, this drop in sugar prices has led to confectionaries using more sugar in their glucose and sugar blend. It also led to more consumption as the prices of sweets and biscuits are a little bit lower.
The federal government recently approved a new sugar master plan that will save the country 350 million dollars annually and also drive backwards integration. The plan impacts Dangote positively as they have also come up with a master plan.