dangote group

Price War: Dangote Petitions Trade Ministry, Wants BUA Sugar Refinery Shut Down

A major war has been raging in the Nigeria sugar industry for some time now and the bubbles seemed to have burst with Dangote s decision to petition the Federal Government asking the Ministry of Trade to shut down BUA Group’s Sugar Refinery located in Port Harcourt.

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In the letter dated 28th January 2021 signed by Aliko Dangote himself as the Chairman Dangote Industries Limited, the billionaire claimed that when the BUA Sugar refinery was opened , he warned the Government and they told him that no new refinery would be allowed to operate in Nigeria’. Dangote accused BUA of operating with impunity by contavening the laws as laid down in the National sugar policy by selling it’s products locally instead of producing for export alone.

BUA in its own defence sent to the Honourable Minister of Trade however clarified issues by stating that the law allows it to sell inside Nigeria.

BUA also warned that DANGOTE group and the other major player have not been involved in any backward integration project, rather they depend on 80% raw sugar allocation which is detrimental to the Nigerian economy in long term analysis.

BUA on the other hand has been involved in backward integration project with BUA’s Lafiagi Sugar BIP set to be completed in 2022.

Over 250million dollars is believed to have been spent on the export focused BUA sugar refinery already and it is also employing over 1,000 Nigerians.

Meanwhile, BUA also noted that at the centre of this fight to force FG to close BUA Sugar refinery down is the price war.

Insiders said last year, before Ramadan, sugar sold for around 18,000 Naira per bag. But as Ramadan fasting started the price jumped to 30,000 per bag. The people had no choice but to buy it because they needed a lot of it during the period.

So the manufacturers were smiling to the bank. BUA group noticed the trend and decided that it had to change. There was no reason to increase the price during Ramadan simply because the demand is high.

Usually the increase happens about one month to commencement of fasting.

When the other manufacturers got across to BUA, Samad Rabiu refused. They put pressure on him, saying it was the right time to make good money but he put his feet down.

After failing to do that, they petitioned the Federal Government that he was breaking the law by selling sugar locally instead of for export.

A source however claimed that already, BUA group has dragged the Trade Minister to court to ensure that the operations of the sugar refinery is not tampered with all because of the desperate attempt by Dangote Group to monopolize the sugar trade in Nigeria

Our reporter has seen copies of the letters from Dangote to the Minister, the Minister’s letter to BUA as well as BUA’s reply to the Minister.

SOURCE

Dangote-Cement2

Dangote Cement Enters Trillion Earners’ Club With 15.9% Revenue Growth.

Dangote Cement Group has grown its revenue by 15.9 percent in 2020, crossing over to the trillion league with its earnings that surged to N1.034 trillion in 2020 from N891.671 billion in 2019.

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The cement company in its 2020 financials show that its Gross profit rose to N596.226 billion up from N511.682 billion, representing a 16.5 percent growth.


Administrative expense climbed to N60. 339 billion from N54.124 billion, while Production cost of sales stands at N437,970 billion up from N379.989 billion. Also Selling and distribution expenses is at N153.719 billion.


The Profit from operating activities fell from N386. 734 billion to N276.068 billion for the year after an Income tax Expense of N97.24 billion was deducted.

Dangote Cement’s profit after tax (PAT) of N276.068 billion soared from N200.521 billion it posted in 2019, which indicated a 37.7 percent appreciation, profit before tax rose by 49 percent, leaping from N250.479 billion the previous year to N373. 310 billion in the year in review.


According to the 2020 statements, the company’s Total Assets are put at N2.022 trillion, jumping from N1.742 trillion, a 16.1 percent growth. However, its Equity fell by 0.77 percent to stand at N890. 970 billion down from N897.937 billion.

Its Liabilities outstripped Assets by rising by 33.9 percent to stand at N1.131 trillion from N844.500 billion in the corresponding year.

According to the Financials, Property, plant and equipment stand at N1.390 trillion, while its share capital remains at N8.520 billion same as 2019.


Also, the company’s earnings per share, basic and diluted moved to N16.14 Kobo up from N11. 79 Kobo it posted in the previous year. It generated N720 billion of the revenue from its operations in Nigeria, while about N320 billion from the offshore operation.


The report also revealed that sales volume from its products rose by 8.9 per cent, while its net cash flow of N511.89 billion from its operating activities soared from N426.12 billion in 2019.

Dangote Cement also proposed a dividend payout of N16 per share, this is while disclosing a tax charge of N97 billion for the financial year ended 31st December 2020. A tax charge represents an increase of N50 billion recorded in 2019.
Dangote Cement’s Nigerian operations during the period sold 15.9Mt for the full year 2020, compared to 14.1Mt in 2019. This includes both cement and clinker sales. Looking at the domestic sales alone, Nigerian operations sold 15.6Mt. Revenues for the Nigerian operations came in at N720.0 billion, owing to demand in the domestic market.


This volume growth was enhanced by a successful innovative national consumer promotion “Bag of Goodies – Season 2” and lower rains in the third quarter compared to the previous year.

Dangote Cement posted a record high Pan-African EBITDA of N71.3 billion. Within the period under review, the cement group commissioned its gas power plant in Tanzania. Group earnings per share were N16.14.

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Nestle, Dangote Sugar, GTBank deliver superior ROE in 10 years – Coronation Asset

Over the past 10 years, Nestle Nigeria plc, Dangote Sugar Nigeria plc, and Guaranty Trust Bank have generated more profit from their shareholders investments than peers as evidenced in the consistent and superior return on equity, according to a recent report by Coronation Asset Management, titled ‘Navigating the Capital Market: the Investor’s Dilemma’.

The report studies the impact of the macroeconomic environment on earnings and valuations of Nigerian Stock Exchange (NSE) listed companies, and also beams its searchlight on investment returns, short-term government securities and inflations.

The return on equity (ROE) indicates how effective management is at using equity financing to fund operations and grow the company.

Over the past decade, companies have been operating in an unpredictable macroeconomic environment characterised by currency devaluation, deteriorating infrastructure, inflationary pressure, and volatility in oil price.

Some sectors have not recovered from the sharp drop in crude oil price of mid-2014 that stoked severe dollar scarcity and consequently tipped the country in its first recession in 25 years.

According to Coronation Research, GTBank, the largest lender by market value, had superior and consistent ROE in the last 10 years, which means it is a worthwhile investment.

The lender’s returns have been consistently higher in the benchmark Fair Value Equity Return (FVER), a parameter the investment house uses to gauge the efficient and profitability of an entity.

The analysis of the 2019 financial statement of top tier banks shows GTBank recorded ROE of 28.64 percent, which compares to Zenith Bank (24.80%); Access Bank (15.98%), and United Bank for Africa (14.90%).

Coronation Research, however, says the good news is that the trend (FVER) has been moving upwards.

For instance, Zenith Bank has joined GTBank as a strong performer (i.e. its RoE exceeds the FVER) over the past three years, while Access Bank joined this fortunate group last year.

The report observes that among the pure-play food manufacturing companies there is the remarkable exception of Nestle Nigeria, which has recorded an average RoE of 74 percent over the past 10 years.

Analysts at Coronation Research attribute the success of the consumer goods giant to its product portfolio that has won consistent loyalty from Nigerian consumers; its operating margins have been high and consistent, thanks to a high degree of local sourcing; it pays almost all its Net Profits as dividends, keeping its equity level low.

The analysts say majority of Nigerian listed companies do not return what they consider an adequate – 20.53 percetn – RoE; but they add that there are notable exceptions and several bank stocks deliver returns above this level, while other bank stocks are trending towards this level.

The report notes that many industrial companies have reported steeply declining returns over the past 10 years, disappointing a generation of investors in Nigerian industry.

Interestingly, the listed brewers are hardest hit from the economic downturn as ROEs of two out of the three dominant players in the industry have been declining in the last 10 years.

Aside macroeconomic uncertainties, the brewery industry was reeling from stiff competition; this happened when International Breweries launched top brands into the market in 2013. Peer rivals found it practically difficult to grow revenue.

The Fast Goods Consumer Goods Companies (FMCGs) have seen operating margins deteriorate due to hike in utilities and spiralling inflation that erodes the purchasing power of consumers. Because they had hiked the price of product in 2017 to compensate for rising production cost caused by dollar scarcity, it would be practically difficult for them to pass rising cost to beleaguered consumers in form of higher price.

The coronavirus pandemic that ravaged economies across the globe and disrupted the demand and supply side of the market, as government imposed lockdown policies, has dealt a great blow to the industry.

The earnings seasons have kicked off, showing play food companies that have released half-year results falling off the cliff.

Coronation Research notes that many companies with high shareholder returns have failed to deliver stock price returns of the same order.

“This is because the market has been de-rating these stocks, over time paying lower and lower multiples for their earnings. We cite several bank stocks as examples,” notes the report.

To shareholders who have invested in an entity with cash that would have been deployed in other investments, profit is the only thing to them.

Investors’ apathy towards the Nigerian equity market has heightened as they have been dumping shares due to lack of policy direction on the part of President Muhammadu Buhari-led government and poor macroeconomic indices.

The crash in oil price due to the coronavirus pandemic and rift between Saudi Arabia and Russia have elicited stock market rout as sentiments towards the equity market weakened to a record low.

In all, the All Share Index closed H1-2020 (July 24) at 24,474.62pts, with YTD loss pegged at 8.18 percent.

Post Credit:https://businessday.ng/lead-story/article/nestle-dangote-sugar-gtbank-deliver-superior-roe-in-10-years-coronation-asset/