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BUA Foods Records Strong Profit Growth Amid Headwinds

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The new kid on the block BUA Foods Plc is poised to deliver higher returns to shareholders as the consumer goods giant recorded strong profit growth even amid supply chain bottlenecks, inflationary pressures and decrepit infrastructure.

The company that listed on the exchange in the first week of January to become the most capitalized consumer goods firm in the country saw net income surge by 99.47 percent to N75.17 billion in December 2021 from N37.70 billion as at December 2020.

Revenue spiked by 73.03 percent to N333.67 billion in December 2021 from N192.54 billion the previous year.

Analysts attribute the strong growth in earnings to an excellent marketing and distribution strategy, diversified product base and the acceptance of the company’s products among consumers across the country.

Operating profit spiked by 70.79 percent to N91.03 billion in the period under review from N53.30 billion as at December 2020.

The company is able to effectively manage costs attributable to projects as gross profit was up 59.07 percent to N103.25 billion in December 2021 from N64.91 billion as at December 2020.

It is worthy to note that investors who have not bought BUA Cement’s stocks will be missing out on a bumper dividend the consumer goods giant will be paying out of distributable profit to shareholders.

BUA Foods has a 1.5 million MTPA Combined Sugar Production Capacity, eight ultramodern factories for producing rice, sugar, pasta, flour and 20,000 hectares of arable land located in Lafiagi, Kwara State.

The new consumer goods firm has 2 ultra-modern and automated sugar refineries (BUA Sugar Refinery, Lagos and Eastern Sugar Refinery, Port Harcourt) with a combined installed refining capacity of 1,500,000 metric tonnes.

“BUA is the only sugar refiner to have refining capabilities outside Lagos, Nigeria. In response to Nigeria’s backward integration policy in the Sugar Industry, BUA Group acquired the Lafiagi Sugar Company (LASUCO) in Kwara state in 2008 and established the Bassa Sugar Company in Kogi State,” said analysts at CSL Stock Brokers in a note to clients.

BUA Foods is poised to create a more competitive arena as it has established a state-of-the art plant in Port Harcourt, to cater to the growing needs of fast-growing young population who crave for consumption.

The plant currently has 576,000 tons of flour milling capacity. Its closest competitors are Flour Mills of Nigeria, Honeywell Flour Mills, and Olam.

However, the company operates in a tough macroeconomic environment and the inability of the government to formulate transformational policies capable of spurring rapid economic growth has continued to hurt companies who are reeling from foreign exchange crisis while inflationary pressures and high utility bills have stolen the wages of workers.

The eight-month consecutive decline in headline and food inflation came to an abrupt end as the National Bureau of Statistics (NBS) reported headline inflation in December 2021 at 15.63 percent year on year  (yoy).This was 23bps higher than 15.40 percent yoy reported in November 2021, but 13bps behind 15.75 percent yoy in December 2020.

There is light at the end of the tunnel as the relaxation of the lockdown is expected to be a boon for consumer goods firms.

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