‘Nigeria Will be Self-sufficient in Sugar Production’

Managing Director of Dangote Sugar Refinery Plc, Mr Abdullahi Sule, speaks to Kunle Aderinokun on the sugar industry and the company’s plans to make Nigeria self-sufficient in sugar production. Excerpts:

How has your operations been in recent times?
Business generally is full of challenges. Ours is not an exception. We have had various kinds of challenges, security, operating environment and challenges that are peculiar to our sector. We also have location and competition challenges as a result of where we are located. But in a nutshell, I will say that business has been going on very well for us. We thank God for all the progress that we have seen. We have witnessed growth in most areas of our operations, our sales turnover has also improved greatly as well as profitability.

Specifically, what are your figures like?
As far as figures are concerned our account for our second quarter has already been published and we are just getting ready to look at the figures for the third quarter. We recorded a turnover of N26.7 billion in the second quarter and our half year is much better. We recorded a turnover of N56.2 billion in the half year ending June 31, 2012 as against N48.6 billion in the comparable period. As far as our gross profit is concerned, for 2012, we recorded N11.1 billion as against N7.3 billion for the same period last year.
We have seen our profit from other operations grown from N5.7 billion compared with N2.7 billion last year. We are happy with the improvement that we have seen this year. I did not remember to tell you that our earnings per share has increased to 95 kobo as against 50 kobo last year, almost 100 per cent growth.

Will you be able to sustain this growth next year, given the fact that there are fears that the fire accident that burnt a portion of your sugar refinery will affect your operations?

We have two areas as far as the fire issue is concerned. One area is the production aspect itself -our operations. Yes the fire has affected over 50 per cent of our production currently. However, we have been able to isolate the section that got burnt and we are producing sugar from the sections not affected by the fire. The saving grace for us is that we have enough sugar stored in our warehouse that will last for over two months. So we have been able to use our strategic reserve to complement what we are not producing from the sugar refinery at the moment. As a result of that, what will go out to the public as our turnover as well as our profitability is concerned will absolutely have no effect on us. But within the company, we know that we will be affected in some way because our strategic reserve is going to reduce.


As it is, we are doing all we can to ensure that we restore the refinery to its usual capacity. A contract has been awarded to a UK company that is familiar with the equipment. They have promised that they will bring all the equipment and install them before the end of the year. At most by October this year, the refinery would have been restored and our reserve will not even be depleted. Our effort then would be to produce enough sugar to meet the demands of the market and replenish our strategic reserve. That is the challenge for us now and we are sure we will achieve this by the fourth quarter of the year.

In essence, your customers are not feeling the impact of the fire accident?
Well, so far no. We had that accident in July this year and that same month we recorded the highest sales in this company. We sold more sugar than we have sold from January to June in any given month. As far as the company is concerned, we are okay. We have not increased the price of sugar as a result, rather, we have reduced the price for our industrial customers. The general public will soon see the reduction in the price of sugar.

Can you give us the figures of your production and sales?
So far we are producing over 700,000 bags every month. That is approximately 50 per cent of what we sell. In July, we sold over one million bags to the general public and over 700,000 came from our strategic reserve and then the balance was produced from the refinery.

So now do you think the volume of sugar you have just mentioned is enough to go round the country?
If it was not enough they would have asked for more. We have not restricted ourselves to the public and to our customers. We have actually delivered everything they have asked for. If a customer asks for 100 trucks, we supply that amount. As at today, we have supplied the volume every customer required. I believe very strongly that whatever we are supplying to the market is what it demands.

What percentage of the market do you control?
It goes from month to month. In July we had 80 per cent of the market. But usually our share of the market is 70 per cent.

What are your projections for the future?
There are a lot of projections along the line. The first projection that we have is to sell enough sugar to our customers. Remember we are a refinery and there are more refineries coming. But most of them rely on importation of raw materials. Our projection for the next five years is that we will limit the amount of raw materials that we import and produce locally. During our last Annual General Meeting (AGM), we got the nod of our shareholders to acquire Savannah Sugar Limited, which is a fully integrated company. With that we have been able to do all the farming and harvest of the sugarcane locally. We are sure to produce our sugar locally without importing from Brazil. Our long-term plan is to ensure that Nigeria is self-sufficient in sugar production.

Which are the other refineries that you talked about?
There is the BUA Sugar Refinery, which is about 50 per cent of our refinery and also the new Golden Penny Sugar Refinery, which belongs to Flour Mill Nigeria Plc.

Are you not afraid that these new entrants will take market share from you?
No. Not at all, they are most welcome. The reason is: the more refineries the more sugar in the country. We are already leaders in the industry and as others are coming in we are heading to other areas. For instance, we are expanding our refinery from 1.4 million metric tonnes to 2.5 million tonnes capacity. Each of them has 750,000 metric tonnes, so ours is going to be three times their own, in fact more than three times the size of each of them.


So with all that sugar in the country, we are looking at export, which we have already started. We are looking at doing sugar in retail packs, which we have already started. We have been in the market too long to be intimidated. Our position is that of leadership, not competition. By 2014, we would have fully increased our capacity to the size I just told you about.

How involved is your company in corporate social responsibility?
We give out a lot. There are two things that we do. For example, Dangote Industries, which is the holding company has majority shares in all its subsidiaries. So we have a common pull under the Dangote Industries, which has a foundation.


As you aware, we are at the forefront anytime there is a crisis in Nigeria. The foundation has been at the forefront of supporting education, we have people in several institutions that we train and employ. During the recent crisis in Bauchi, Plateau and some Southern States, our foundation has been in the forefront of support. Internationally, we have also assisted. Recently, we gave over N100 million to support the people of Sudan.

What makes Dangote Sugar unique?
One is quality. Until recently we were the only sugar refinery in Nigeria. Another thing is our size; we are second only to the Al Khaleej Sugar Refinery of Dubai in the whole world. Operationally, we are situated in the nation’s premier port, we have dedicated jetties, and we have the brand name- Dangote and other advantages that make us unique.

SOURCE: thisdaylive