Dangote Sugar Refinery Plc has returned to profitability after three consecutive years of significant losses, which had severely impacted its balance sheet.
The sugar refining company reported an after-tax profit of over N19 billion in its first quarter, a significant improvement from a net loss of N23.6 billion in the same quarter of 2025.
The company’s interim financial report for the first quarter ending March 2026 highlights two big moves by management that turned the earnings story around. One was cutting production costs, which boosted gross profit, and the other was a more significant step toward freeing the company from its debt burden.
While operations remain constrained by revenue losses, big cost savings from production and finance expenses turned around the bottom line from red to blue.
Sales revenue dropped by 12.2 per cent year-on-year to just under N188 billion in the first quarter, while production costs were reduced at a much faster rate—over 29 per cent—to N144.7 billion.
Cost-cutting is driven by a 35.6 per cent year-on-year drop in raw material costs and a 35% decrease in freight expenses over the same period.
Balancing costs and incomes marks a key turning point for the company’s operations, boosting its gross margin. The share of sales revenue taken up by the cost of sales fell from 95.7 per cent in the same quarter last year to 77 per cent by the end of the first quarter in March 2026.
Gross profit soared thanks to stronger margins, jumping more than four and a half times from last year to surpass N43 billion by the end of the first quarter.
Reinforcing the rise in gross profit is other income, which came like a windfall, scurrying up from only N143 million in the same period last year to N9.5 billion at the end of the first quarter.
The company reined in operating expenses amid the strong revenue delivery, as other income alone was more than sufficient to settle all operating expenses for the period.
The result of operating activities was therefore a strong performance, with operating profit multiplying by more than 16 and a half times to N45.8 billion for the first quarter.
Yet another major strength was added from financing activities with a decline of about 5 percent in finance expenses – which remain huge nevertheless at N28.5 billion. Net finance expenses went down from N27.5 billion to N26.8 billion over the review period.
The reduction in finance expenses is a reflection of some reduction as well in interest bearing financial liabilities – that had been gulping earnings and creating losses in recent years. In 2025, net finance expenses of roughly N171 billion easily consumed the entire operating profit of N96 billion and left a pre-tax loss of over N72 billion.
Short-term borrowings in excess of N37 billion were paid off during the quarter and long-term debts were cut down from N688 billion at the end of last year to N625 billion at the close of the first quarter.
The favourable cost and income developments during the quarter changed the earnings story of the sugar refinery from a pre-tax loss of N22.6 billion in the same quarter last year to a pre-tax profit of N20.7 billion at the end of the first quarter in 2026.
Also, after tax profit of over N19 billion appeared at the end of the first quarter in place of a loss of N23.6 billion in the same period last year.
With the return to profit, the company’s weakened capital account is starting to heal. Accumulated losses have reduced from the region of N190 billion at the end of the preceding financial year but remains large at N170.6 billion at the end of the first quarter.
Dangote Sugar Refinery earned N1.58 per share for the first quarter, recovering from loss per share of N1.95 in the same period in 2025.
Whether the company sustains the return to profit or slips back into the red will be the key points to watch on the company in the coming interim reports.
