Tuesday, March 22, 2016 4:45PM /Investment-One Research
Q4 2015 results highlight
Strong sales performance up 27.8% q/q; 33.0% y/y
Mixed PBT down -47.4% q/q, up 8.3% y/y respectively
PAT came in lower -27.2% q/q;-0.9% y/y
Opex/sales worsened by 237.8bps q/q, stronger by 292.2bps y/y
Dangote Sugar Nigeria Plc (DANGSUGAR) yesterday released its Q4 2015 results which showed improved top line performance supported by strong pick up in volume in the last quarter of the year. Revenue at N28.02bn came in stronger by c.27.8% q/q and 33.0% y/y while PAT came in lower, falling by -11.6% y/y. This was dragged by a combination of over 167bps contraction in gross margin as well as worsening opex/sales (up 8.2%), which more than offset the over 100% improvement in tax burden.
On a q/q basis both PBT and PAT fell by -47.4% and -27.4%, driven by a combination of an astronomical rise in cost of sales (up 64.2% against previous quarter) due to uptick in price of raw sugar in the global market (up+9.1% between Sept. and December), and contraction in margin across board. Hence, Gross profit margin, PBT and PAT margin contracted by -2065bps, c.-1187bps and c.-593bps respectively, inspite of the over 500% jump in other income.
On a full year basis, the result was much more encouraging. While both revenue and PBT climbed by +6.5% and +8.3% respectively, supported by over 200bps contraction in Opex/sales, PAT however softened by -0.9% dragged by increased tax burden. Margin wise, Gross margin and PBT margin at c.21% and 16% strengthened by 87bps and 27bps each.
Conclusively, the result was reflective of the gain from recent backward integration efforts being made by the company. Going forward, we expect to see improved production volume as the company push further on its Sugar for Nigeria initiative. However, growing difficulty in accessing FX for importation of raw sugar remains a downside risk, expected to pressure Opex in the course of the year.