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Consistent sales growth amid a difficult operating environment has allowed BUA Foods Plc to achieve scaling efficiencies and generate continuous shareholders’ value that makes the company the cream of the crop in the consumer goods industry.
Despite deteriorating consumer spending and rising inflation, BUA Foods has seen several positive earnings estimates as the company’s well diversified product base continues to support earnings growth.
This impressive financial performance has elicited or strengthened analysts’ optimism that the consumer goods giant will continue to soar since it has weathered a vicious storm.
For the first three months through March 2024, BUA Foods’ revenue spiked by 147.32 percent to N356.92 billion from N144.31 billion as at March 2023.
Notably, considerable growth was observed in sales from fortified sugar (+221.31 percent year on year (YoY) to N197.60 billion) and Bakery Foods (+172.12 percent to N80.63 billion) as at March 2024.
When it comes to top line strength, BUA Foods has been a standout, outperforming competitors.
Peer rivals such as Nigerian Breweries recorded sales growth of +84.2 percent; Nascon Allied Industries, +39.70; Guinness Nigeria, +43.88 percent, and Nestle +43.3 percent and Dangote Sugar +20 percent. Â
“Riding on substantial revenue growth and efficient management practices, BUAFOODS has consistently upheld profit growth, staying on course to generate value for its shareholders,” said analysts at Meristem Securities Limited.
The company saw net profit increase by 37.41 percent to N55.82 billion in the period under review from N40.68 billion the previous year.
Making money from core operations, BUA Foods’s earnings before interest and tax (EBIT) otherwise known as operating profit surged by 117.48 percent to N104.72 billion as at March 2023.
It is important to note that the company sources its raw materials and food commodities from agricultural producers both domestically and outside the country.
BUA Foods is efficient in converting sales to cash, an indication of good earnings quality as operating cash flow margin rose to 35.23 percent in March 2024 from 27.35 percent the previous year.
“BUA Foods maintains an extensive supply chain and is actively involved in backward integration initiatives, particularly focusing on sugar and promotion of local paddy rice sourcing,” said analysts at Meristem Securities.
“To further develop the agricultural value chain and enhance local sourcing, as part of its initiative, BUAFOODS plans to expand its farm-to-table initiatives to involve collaboration with external growers to source wheat and edible oils,” summed analysts at Meristem Securities.
Investors have rewarded the firm, swooping on its shares which have gained 96.4 percent so far this year, outperforming the NGX ASI Index which is up 31.01 percent.
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