BUA Foods Nigeria Plc is more efficient in generating profits from sales than peer rivals in the consumer goods space, thanks to better management controls, more efficient use of resources, and more efficient marketing.
The company recorded operating income margin of 26.67 percent as at September 2021-which is an increase from 25.41 percent recorded the previous year- and that compares with Nestle Nigeria, (21.45 percent); Nigerian Breweries, (8 percent Dangote Sugar, (14.64 percent).
Others it outperformed are: Guinness, (14.71 percent); Nascon Allied, (14.48 percent); Cadbury, (6.09 percent); Unilever, (1.05 percent), Flour Mills, (4.60 percent).
A higher margin means BUA Foods is generating income primarily from its core operations even amid inflationary pressures and other myriad of challenges undermining the industry.
The company that listed its shares on the NGX ASI a few ago saw operating income spike by 12.08 percent to N21.24 billion in September 2021 from N18.95 billion the previous year.
Net income followed the same growth trajectory as it was up 6.68 percent to N16.56 billion in September 2021 from N15.52 billion the previous year.
Analysts are sanguine that BUA Foods will deliver a much higher returns to shareholders and give peer rivals such as Nestle Foods, Dangote Sugar, Nascon Allied, and PZ Cussons a run for their money because it has a diversified product base that meets the needs of Nigerians who crave for consumption.
With a market capitalization of N1.11 trillion as at 2:00 pm Tuesday, BUA Foods is the second consumer goods firm by market capitalization. And it could leapfrog Nestle Foods as the most valuable firm if investors react positively to the stellar performance.
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 Broker 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.