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Dangote Sugar Refinery (DSR) Plc plans to invest N106 billion over the next six years in the second phase of the company’s backward integration programme. It had already invested N101 billion under the first phase of the programme.
Acting group managing director, Dangote Sugar Refinery (DSR) Plc, Engr. Abdullahi Sule, outlined the new investment plan during a stakeholders’ engagement programme yesterday at the Nigerian Stock Exchange (NSE).
Sule said the backward integration programme of the company was aimed at ensuring that Nigeria attains self sufficiency in sugar production.
He outlined that under the second phase of the programme, the company would acquire five large sugar factories and 108,000 hectares of land under cultivation while targeting to achieve 1.08 million metric tonnes per annum of refined sugar from locally grown sugar cane annually.
He added that the massive investment plan would also come with additional benefits including some 130 million litres of Ethanol potential across all sites, animal feed, surplus power generation capacity sourced from cane fiber and more than 75, 000 jobs over the six-year period, which will all help to stimulate the national economic development.
“Achievement of our backward integration plan and growing our market share remain our focus, and efforts are geared towards achievement of effective resource optimisation and cost management; drive for greater efficiency especially in supply chain; human capacity building and route to market redefinition,” Sule said.
He pointed out that while the financing mix for the second phase has not been decided, at least 20 per cent of the projects under the plan would be financed by equities.
He assured that the company has the wherewithal to finance the plan, noting that the company has capacity to borrow, although it has no debts at present.
Sule said Dangote Sugar Refinery currently controls at least 70 per cent of Nigerian sugar market, adding that the Dangote Group is working to produce more than 70 per cent of what Nigerians will use through its backward integration.
He assured shareholders that the company would continue to improve on returns to investors noting that the first quarter results have already indicated that performance in 2017 would be better.
“The year 2016 was a challenging year, yet we declared fantastic result that was better than 2015 performance. As if that is not enough, we have just published our first quarter result which is far better that the previous year,” Sule said.
Key extracts of the three-month report for the period ended March 31, 2017 showed that DSR grew sales by 83 per cent to N59.5 billion in first quarter 2017 as against N32.6 billion recorded in comparable period of 2016. Gross profit increased by 16 per cent to N7.84 billion in 2017 as against N6.77 billion in 2016. Profit after tax rose to N4.76 billion in first quarter 2017 as against N3.34 billion in first quarter 2016.