Global cane sugar prices have remained elevated as the 2024/2025 crushing season has underperformed expectations, compounded by dry conditions that are projected to reduce harvest yields. While production in Brazil, the world’s largest exporter and Nigeria’s primary source of sugar, saw a notable improvement, with a record export of 15.12 million metric tons (MMT)—a 7.7% increase in the first half of 2024—India continued its export ban introduced in 2023, despite surplus domestic production and falling prices. Sugar prices are expected to remain under pressure in 2025 due to higher-than-anticipated supply from Brazil, India, Thailand, and other major producers.
The global sugar market also experienced a surge in the imposition of sugar taxes, with 132 countries now taxing sugary beverages. Of these, 41 nations introduced sugar taxes between 2018 and 2024. Analysts suggest that the global average sugar tax rate of 3.4% is unlikely to significantly reduce demand in 2025. In a bid for self-sufficiency, Kenya passed the Sugar Act 2024 in November, which establishes a sugar board aimed at regulating and promoting the industry. Nigeria has also made strides towards self-sufficiency in refined sugar, with a reported refinery capacity of 3 MMT under its National Sugar Master Plan (NSMP) and Backward Integration Programme (BIP), which has attracted $1 billion in investments.
However, analysts from Proshare caution that Nigeria’s progress toward reducing dependence on imported cane sugar remains uncertain. In 9M 2024, Nigeria imported approximately N0.58 trillion worth of cane sugar from Brazil, a 67.31% increase from the same period in 2023, exacerbated by a depreciated naira. This growing import reliance has contributed to a liquidity crisis for Dangote Sugar Refinery (DSR), Nigeria’s largest sugar producer. The company’s foreign exchange losses spiked by 156.61%, and its operating expenses surged by 89.59%, resulting in a third consecutive year of negative growth in pre-tax profits for the period.
DSR’s financial performance reflects significant pressures, with a sharp increase in the cost of sales, particularly across its regional operations. The company has also faced increased liabilities and assets across these regions. However, DSR successfully raised N42.79 billion in June 2024 through the issuance of Series 4 and 5 commercial papers, with plans to raise an additional N50 billion by December 2024. These funds are aimed at addressing short-term working capital needs.
Despite the challenges, the group’s performance improved across all segments in 9M 2024, driven primarily by price effects, except for income from freight activities. However, DSR’s return to shareholders remained negative, a trend that mirrors 9M 2023. The company’s liquidity challenges were reflected in its declined current and acid test ratios, but the issuance of commercial papers has provided crucial funding support.
DSR’s share price performance in 9M 2024 has also trended below the N50.13 average, reversing the upward trajectory seen in the last quarter of 9M 2023. Analysts attribute the decline to the company’s poor financial results and the suspension of its merger with Nascon Allied, which has dampened investor sentiment.
In comparison, other sugar producers in Nigeria have reported higher revenues in 9M 2024, driven by price effects, although elevated costs and financing conditions have eroded profitability. BUA Foods, however, outperformed its peers, benefiting from its larger scale and efficient operations.
The outlook for the global and Nigerian sugar markets remains uncertain, with rising costs, export restrictions, and the imposition of taxes potentially continuing to weigh on both production and demand in the coming years.
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