Nigeria’s biggest sugar refiner, Dangote Sugar Refinery, could resume dividend payment in at least 2027 after halting payout following a brutal two consecutive years losses that began two years ago.
But with an improving macroeconomic condition that saw the sugar refiner return to profitability, posting N13.7 billion in net profit in the third quarter of 2025, its first positive quarterly outturn since Q4 2024 and the strongest since Q1 2023, CardinalStone analysts see a return to dividend payment after a pause since 2023.
The dividend resumption is premised on the projection that the company’s retained earnings would have moved from its negative territory and shareholders’ equity position risen on improved margins. As of the nine months period ended September, retained earnings was in a negative position of N136.3 billion.
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“Although we forecast a return to profitability in FY’25 and a stronger earnings rebound in FY’26, these improvements are insufficient to fully offset the accumulated retained losses,” the Lagos-based consultancy said in an earnings update recently.
“As such, we expect retained earnings to remain negative through FY’26, limiting the company’s capacity to declare dividends. On this basis, we do not expect dividend resumption until at least FY’27, when sustained profitability may finally restore positive distributable reserves.”
Dangote Sugar recorded two straight losses in 2023 and 2024 majorly due to the sharp devaluation of the exchange rate that saw the naira shed almost 70 percent of its value.
Given that about 90 percent of the company’s raw material inputs are imported, the steep decline in the value of the currency meant ballooning cost of sales and foreign exchange losses, a condition that led to piling losses.
Net loss stood at N73.8 billion in the full year 2023 and more than doubled as of the end of last year. But CardinalStone forecast that a return to profitability is on the horizon, projecting N5.2 billion in profit after tax compared to N27.4 billion it had earlier predicted.
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“We expect easing costs to translate into better margins. Specifically, we forecast FY’25 gross, EBIT, and net margins of 16.0%, 14.4%, and 0.6%, respectively (vs. previous estimate of 12.5%, 9.6%, and –3.0%),” the analysts said.
“For FY’26, we see room for further improvement in the company’s performance, linked to more optimistic macro expectations. We expect revenue to grow 26.0% YoY, surpassing the N1.0 trillion mark to reach N1.1 trillion, driven primarily by continued volume recovery amidst improving consumer wallet.
Additionally, with cost of sales expected to ease, finance costs set to decline, the absence of significant FX losses, and the benefits of the company’s debt refinancing strategy, we forecast gross, EBIT, and net margins of 18.0%, 15.4%, and 4.0%, respectively.”