LAGOS, Nigeria, Capital Markets in Africa — Dangote Sugar Refinery (DSR) (BUY. TP: N8.77) released its full year 2015 results yesterday. Revenue came in higher than our forecast, up 6.5% YoY to N101.1 billion (PAFR 2015E: N97.7 billion) while earnings were in line with our estimates with PBT up 8.3% YoY to N16.5 billion (PAFR 2015E: N17.1 billion) and PAT flat at N11.5 billion (PAFR 2015E: N11.3 billion). The top-line beat was on a stronger than expected fourth quarter performance which saw the company produce 216,656 tons of sugar, its highest quarterly output in 2015. The volume growth was driven by a 28% price cut during the period.   YoY full year revenue growth was as a result of average price increase (up 11%) vs. 2014 as group total volume sales was flat at 782,120 tons (while total sugar produced was down 9% to 762,710). Production during the year was hampered by gas supply disruption, traffic log jams, and loss of working days. Further aiding revenue was contribution from Savannah with improved cane yields (65 tons/Ha) and refined sugar output (6,440 tons),  and increase sales of retail sugar (revs up 61.8% YoY).

 Margins improved – gross, EBIT, and EBITDA up  87bps, 350bps,  130bps, respectively – as higher selling prices and lower raw sugar prices helped offset the costs of higher LPFO consumption. Also management slashed opex (down 25%)  on reduced marketing spend and cuts in overhead.  The company proposed a dividend payment of N0.50, implying a divi payout of 52% and yield of 7.9%.

 Management will be hosting a conference call for analysts and investors on Tuesday, 22 March 2016, at 3:00pm Lagos time to discuss the FY 2015 results. The dial-in details are as follows:

Nigeria:          +234 (0) 800 1234 646 / +234 (0) 1440 5158 
UK:                  +44 (0) 800 327 7280 / +44 (0) 207 043 4129
USA:                 +1 866 840 9752 / +1 646 663 7922
South Africa:      +27 (0) 800 982 759

Pin code: 252481#

Source: Lanre Buluro, Head, Investment Research 

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