Dangote Sugar’s revenue growth overshadowed by rising costs and debt burden

DANGOTE Sugar Refinery Plc recorded a revenue of N829.21 billion in 2025, representing a 25 percent increase from N665.69 billion posted in 2024, according to the company’s 2025 financial statement released to the Nigerian Exchange (NGX) on Tuesday.

On paper, this surge in top-line performance would typically signal strong growth, yet the sugar giant still ended the year in the red.

The company, managed by Thabo Solomon Mabe, faced mounting cost pressures and foreign exchange (FX) shocks, which combined to push it into a loss of N64.12 billion. The cost of sales, representing production expenses, amounted to N706.59 billion, consuming 85.2 percent of total revenue. Administrative costs also rose sharply to N27.88 billion from N18.92 billion the previous year. Selling and administrative expenses, however, fell slightly to N729.44 million, down from N821.86 million in 2024.

Meanwhile, impairment losses climbed to N1.55 billion from N907.12 million. Despite these pressures, the group’s operating profit grew to N96.13 billion, a significant jump from N12.67 billion in 2024, indicating that the core business remained fundamentally strong.

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The real challenge came from finance costs and charges, which severely impacted profitability. Dangote Sugar recorded a finance cost of N170.82 billion, down from N293.66 billion in 2024. Finance cost reflects the total cost of borrowing, including interest and associated fees. In addition, the company incurred finance charges of N175.35 billion, lower than N301.28 billion in the previous year. Finance charges primarily cover interest and lender fees, and for Dangote Sugar, they included exchange losses on letters of credit, interest on commercial papers and overdrafts, and issuance costs on commercial papers.

Essentially, the company relied heavily on debt in 2025, and these financing obligations eroded the gains from its operations. The finance income of N4.55 billion could not offset the burden, resulting in the net loss of N64.12 billion. The situation worsened with an FX revaluation loss of N66 billion, arising from $58 million in foreign exchange forwards that were invalidated by the Central Bank of Nigeria (CBN). The company’s net FX exposure stood at $363.42 billion, £2.26 billion and €375.38 million.

Hence, while Dangote Sugar achieved strong revenue growth and improved operational efficiency in 2025, high borrowing costs and adverse FX movements negated the benefits, keeping the company in significant net losses. The year underscores the challenge of managing financial leverage and currency risk even in a business with solid operational performance.

Dangote’s exposure to FX risks is down to its import of raw sugar, which serves as a major raw material for the refinery. Currently, no sugar refiner in Nigeria produces its own raw sugar, which still negates the original vision of the sugar master plan earlier developed by the government of Goodluck Jonathan.

“Yes, that is what they do,” said a manufacturing expert, who spoke on the condition of anonymity. “They import raw sugar, refine it and sell. But the original Nigerian Sugar Master Plan had envisaged that by now, all players in the industry would have been able to get raw sugar from their own plantations, but that is not happening. We have seen some players build refineries just to refine, but the real business of growing sugar from plantations is neglected.”

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“Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates,” Dangote Sugar said.

“The Group’s exposure to the risk of changes in foreign exchange rates is limited to foreign currency purchases of operating materials (e.g. finished equipment and other inventory items) and trade receivables that are denominated in foreign currencies. Foreign exchange exposure is monitored by the Group’s treasury unit.”

The Group’s exposure to foreign currency risk is largely concentrated in the US dollar. “The Group reviews its foreign currency exposure, including commitments on an ongoing basis. The Company expects its foreign exchange contracts to hedge foreign exchange exposure,” it noted.