BUA Foods proves resilience with 54% growth in Q3

Onome Amuge

BUA Foods Plc (BUA Foods) recorded double-digit growth across key performance indicators for the third quarter, including a 54 per cent increase in net profit to N105.6 billion and an 81 per cent increase in turnover to N524.4 billion.

The results were highlighted in the company’s interim report and accounts for the nine months ended September 30, 2023, a period that was marked by economic turbulence due to inflation and currency devaluation. This period was considered particularly challenging for businesses in Nigeria and was reflected in the financial statements of many companies.

Despite these headwinds, BUA Foods’ financials showed its ability to navigate the economic environment and deliver positive results for its shareholders. This is as gross profit grew by 52 per cent from N45.4 billion to N69.2 billion, while profit before tax rose by 50 per cent from N107.3 billion to N161.1 billion.

The growth in turnover was driven by increases across the key business segments. The sugar business recorded a 74.2 per cent increase in turnover, from N180.9 billion to N315.2 billion. The flour business grew by 126 per cent to N149.9 billion, compared to N66.2 billion in the prior year. The pasta business achieved a turnover of N58.3 billion, 37 per cent higher than the N42.7 billion recorded in the previous year. The newly launched rice business contributed N995 million to the group’s turnover during the period.

BUA Food’s gross profit increased by 95.1 per cent to N183.8 billion in 2023 from N94.2 billion in the prior year. This resulted in a 250-basis point improvement in gross profit margin, from 32.5 per cent to 35 per cent. Operating profit also increased by 94.5 per cent from N80.7 billion to N156.9 billion. The increase in gross profit and operating profit was attributed to higher sales volumes and improved product mix.

The report further revealed that the company’s earnings per share grew by 43.8 per cent from N5.05 to N7.27.

The company’s operating profit margin improved by 210 basis points, from 27.8 per cent to 29.9 per cent, while pre-tax profit margin declined by 410 basis points, from 25.6 per cent to 21.2 per cent.

However, despite the decline in pre-tax profit margin, net profit rose by 53.6 per cent to N105.6 billion, compared to N68.8 billion in the prior year. This resulted in an increase in earnings per share by 53.6 per cent from N3.82 to N5.87.

According to the company, the significant growth across the business divisions was driven by higher volumes sold and price adjustments to reflect the higher input costs. The growth drivers included higher sales volumes, slight price adjustments, and the gradual commissioning of its expansion projects. These factors helped to offset the impact of inflation and currency devaluation on the company’s financial performance.

The company noted that the improved financial performance was also driven by cost optimisation initiatives, such as better management of operating expenses and improved productivity.

In a statement, Ayodele Abioye, managing director of BUA Foods Plc, said the results reflect the strength of the group’s business strategy, the dedication of its team, and the support of its strategic partners. He noted that the results were achieved in the face of several challenges, including rising inflation, high interest rates, pressure on consumer income, and currency depreciation.

Despite these challenges, he said that the company was able to achieve solid results, which is a testament to its resilience and the strength of its business model.

Abioye said, “It is clear that 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 compromising our commitment to quality and service. In addition, our focused investments in expansion projects are on track, providing a solid foundation for further growth and competitiveness.

“Despite the headwinds, we remain excited about the prospects ahead and confident in our business resilience for sustained positive momentum.”