Onome Amuge
In a move that is sure to delight its shareholders,the board of directors of BUA Foods Plc has proposed a dividend of N5.50 per ordinary share for the financial year ended December 31, 2023. The proposed dividend, subject to appropriate withholding tax and shareholder approval, will be paid to those whose names appear in the company’s register of members as at the close of business on August 23, 2024.
A closer look at the financial results of the leading food and fast moving goods company for the year ended December 31, 2023 revealed that the company’s Profit After Tax (PAT) rose 23 per cent to N112.1 billion, while its turnover increased significantly by 74 per cent to N729.4 billion. This performance is all the more notable given the challenging global economic conditions that have prevailed in recent months.
The strong revenue growth of BUA Foods in 2023 was driven by significant increases in sales across its major product lines. Sugar sales grew 54 per cent year-on-year to N422.5 billion, while flour sales increased 152 percent to N216.9 billion. Additionally, pasta sales were up 54 per cent to N87.9 billion.
In addition to the impressive growth in revenue, BUA Foods also saw a notable increase in cost of sales during the twelve-month period. The 64 per cent increase to N468.98 billion was largely driven by rising costs of raw materials and energy. The devaluation of the Naira against the US dollar contributed to higher costs for raw materials, which were then passed on to the final product price. Despite these challenges, the company was able to maintain profitability and drive strong revenue growth.
The gross profit of BUA Foods increased significantly in the 12 month period of 2023, rising by 96 per cent to N260.45 billion. The impressive growth in gross profit was accompanied by a 400 basis points (bps) increase in gross profit margin to 35.7 per cent, driven by the selling price adjustment that occurred during the year.
BUA Food’s selling and distribution expenses increased by 110 per cent during the reviewed period, largely due to the substantial increase in the cost of diesel during the year. This increase was offset somewhat by a decline in administrative expenses of eight per cent to N17.21 billion, compared to N21 billion in the corresponding period of 2022.
Despite the increase in total operating expenses by 43 per cent to N47.06 billion against N32.9 billion in the 2022 period, BUA Foods was able to maintain a healthy level of profitability, with EBITDA increasing by 74 per cent to N215.6 billion. The growth in EBITDA was primarily driven by the expansion of gross profit. Additionally, EBITDA margin expanded by 20 bps to 29.6 per cent, reflecting the company’s strong operating performance.
The company’s operating profit increased by 75 per cent in 12M 2023, largely due to the growth in top line revenues. This was driven by a combination of factors, including price adjustments and volume increases as a result of the expansion of the company’s flour and pasta business. In addition, the company’s operating profit margin improved by 20 basis points to 28.2 per cent, reflecting the success of its cost management initiatives.
BUA Food’s profit after tax grew by 23 per cent in 12M 2023, from N91.3 billion in the corresponding period to N112.09 billion. The significant growth was reflected in the company’s Earning per Share (EPS), which increased by 23 per cent to N6.23, up from N5.07. In addition, the company’s total assets increased significantly to N1.070 trillion, largely due to an increase in trade and other receivables, as well as foreign exchange valuations.
The company’s total liabilities increased by 115 per cent to N808.3 billion in 12M 2023, largely driven by a significant increase in trade and other payables, as well as an increase in short term loans and borrowings. Despite this, the company’s total equity also increased by 13 per cent to N262.05 billion, mainly due to a 14 per cent increase in retained earnings, reflecting the company’s strong performance and ability to generate profit.
The impressive financial results of BUA Foods also led to a 52-week high share price of N379.9, which represents a significant increase from its low point of N102.6 over the past year.
Commenting on the company’s financial results,Ayodele Abioye,managing director of BUA Foods, noted the challenges faced by the company in 2023 due to macroeconomic headwinds which the company was able to navigate, reflecting the resilience of its business model. Abioye further stated that the company’s commitment to creating value for its shareholders remains unwavering, and is underpinned by its unique business model and capabilities as a diversified and scalable food business.
Adeoye added: “Expansion efforts across all frontiers continues to crystallise in supporting growth as we accelerate our strategy to become a leading food brand on the continent.
“We continue to drive efficiency through our integrated supply chain system by leveraging economies of scale in alignment with market expansion efforts towards fulfilling the increasing demand of customers.”
As the company looks to the future, Abioye outlined the company’s continued commitment to unlocking opportunities for improved business performance. He noted that the company is confident in its strategic plans for 2024, and is focused on creating long-term value for all stakeholders.
