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BUA Foods Plc came out of the blue to outperform peer rivals who had long been listed on the NGX index as the company weathered the storm by recording strong growth in financial metrics.
Of course, the consumer goods sector felt the pang of macroeconomic headwinds made worse by rising inflation and high interest rate that compounded the woes of consumers while the unexpected devaluation of the currency resulted in foreign exchange losses that undermined profit margins of most entities.
The ongoing crisis in Russian-Ukraine which caused commodity prices like wheat, maize, raw sugar, and Cocoa to rise to historic highs, have escalated industry cost of sales and shaved off margins.
It is important to note that manufacturers continue to groan under huge energy bills as electricity from the grid has been erratically unstable.
The headline inflation rate increased by 27.3 percent in October, according to the latest data from the National Bureau of Statistics (NBS).
It is important to note that Food and Non-Alcoholic Beverages remained the largest contributors to the increase in the CPI, accounting for 14.2 percent in October.
To tame inflation, the central bank has been raising interest rates and left the monetary policy rate at 18.75 percent as the Monetary Policy Committee (MPC) of the Apex bank has postponed two meetings.
Growth across divisions underpin BUA Foods’s earnings
Despite all of these challenges, BUA Foods Plc delivered strong top and bottom line returns across business portfolios, emerging as one of the largest companies by earnings in Nigeria.
BUA Foods’ revenue grew by 81 percent year on year (y-o-y) to N524.4 billion in the first nine months of 2023 (9M 2023) from N289.80 billion as at September 2022.
There were significant improvements at the divisions.
For instance, revenue from Flour division that contributed 29 percent to Group sales surged 126 percent to N149.9 billion in September 2023 from N66.2 billion in 2022.
This was driven by increase in sales volume and gradual commissioning of the company’s expansion plans as well as redesigned route to market distribution along the integrated supply value chain network.
It is interesting to note that volume sold increased by 73 percent to 238,785 tons within the period from 138,284 tons in September 2022. Revenue from bakery flour grew by 118.4 percent to ₦135.5 billion in September 2023 from N62.1 billion in 2o22.
Interestingly, revenue from the Pasta division contributed 11 percent to revenue increased by 37 percent to N58.3 billion in September 2023 from N42.70 billion in 2o22. This was driven by price adjustments and other innovative proactive sales initiatives within the year.
There was a 4 percent increase in the production volume to 91,305 tons in 2023 from 87,748 tons in 2022 within the period.
BUA Foods has been magnifying rice production as it continues to acquire and plough more lands, creating jobs and stamping its footprints across the country.
These investments are yielding fruit as the company’s new division Rice business contributed N995 million to the top line (sales) in the period under review (Nine months September). The largest consumer goods firm by profit said that across the business divisions there was significant growth in volume sold impacting the overall performance as well.
Due to the slight selling price adjustment and new market penetration for sales within the year, BUA Foods’ gross profit increased by 95.1 percent to N183.8 billion in September 2023 from N94.2 billion in 2022.
Operating profit grew by 94.5 percent to N156.9 billion in September 2023 from N80.7 billion, benefitting from top line growth driven by price adjustment, local market expansion and the company’s export sales and gradual commissioning of our ongoing expansion plans.
Profit before tax increased significantly by 50 percent to N111.4 billion in 2023 from N74.2billion in 2022.
Profit after tax grew by 53.6 percent to N105.6 billion in the period under review from N68.8 billion. The earning per share (EPS) followed the same growth trajectory as it grew by 53.6 percent to N5.87 in 2023 from N3.82 in the corresponding period.
“We are pleased to report a strong and successful fiscal YTD performance for BUA Foods having delivered strong top and bottom line returns across business portfolios and key financial metrics,” said Engr. Ayodele Abioye, the Managing Director of BUA Foods.
“We have experienced double-digit growth within the period with revenue YTD up by 81 percent and PAT by 54 percent, underscoring the strength of our business strategy, dedication of our exceptional team and support of our strategic partners.
These were achieved despite the complexities presented by rising inflation, high interest rate resulting in pressure on consumer income, and Naira depreciation which led to FX losses. Clearly, BUA Foods Plc has not only weathered the storm but has thrived.
“We have strategically navigated challenges by embracing change, doubling down on efficiency, and carefully optimizing costs without conceding our commitment to quality and service. Moreover, our focused investments in expansion projects is on course, providing a solid foundation for further growth and competitiveness,” summed Abioye.
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