- BUA Foods, Nigeria’s leading consumer goods company, reported an 85% increase in profit before tax in Q1 2023, driven by strong revenue growth in its Sugar, Pasta, Flour, and Rice divisions.
- The company’s Sugar division, which accounts for 64.6% of revenue, saw a revenue surge of 71.7% in the first quarter, driven by sales volume growth, price adjustments, and export sales.
- BUA Foods CEO commented on the strong performance despite the challenging economic climate and the company’s commitment to remaining the most profitable business in its sector.
Nigeria’s leading consumer goods company and currently the most profitable business in the food manufacturing division has explained how it was able to generate 71% revenue growth in its Sugar division.
Nairametrics earlier reported, BUA Foods, Sugar division contributes about 64.6% to revenue and is by far its largest business segment. During the quarter, revenue from this segment surged by 71.7% to N93.2 billion in the first quarter of 2023 alone.
According to the information contained in its financial statement explanatory notes, the growth in revenue was driven by sales volume growth, price adjustments, and export sales within the period. Volume sold increased significantly by 25% to 166,373 tons within the period (Q1 2022: 132,941 tons). Fortified Sugar which is sold for household consumption, sustained its market share with a 95.7% increase in sales to ₦61.6 billion
Meanwhile, the pasta division which contributes 13.4% of revenue in the first quarter of 2023 also recorded a revenue increase of 21.8% to N19.4 billion in the period under review. According to the company, the growth was driven by adjustments in pricing amidst other innovative sales initiatives within the year. However, production volume dropped 9% to 31,230 tons within the period.
The company’s flour division which contributed 21.7% of revenue during the quarter, also recorded a revenue increase to N31.3 billion. The company explained this was driven by an increase in sales volume and redesigned route to market distribution along the supply value chain.
It further stated that sales-driven volume growth for the flour division increased by 16% to 53,215 tons within the period (Q1 2022: 45,810 tons). Revenue from bakery flour grew by 61.7% to ₦29.6 billion in Q1 2023 (Q1 2022: ₦18.3 billion) while wheat bran appreciated by 10.1% to ₦1.68 billion in Q1 2023 (Q1 2022: ₦1.5 billion).
The rice division, which is fairly nascent also recorded significant growth contributing 0.3% to revenue ta bout N380 million.
What you should know
Nigeria’s leading food manufacturing company BUA Foods released its 2023 first-quarter earnings showing profit before tax rose a whopping 85% to N49.5 billion. Earnings per share rose from N1.27 to N2.25 in the period under review.
Total equity increased by 17.5% to ₦271.4 billion as of Q1 2023 (FY 2022: ₦230.9 billion) mainly due to a significant growth of 18.1% in retained earnings to ₦263.3 billion as of Q1 2023 (FY 2022: ₦222.9 billion).
The profit margin for the period was 33.9% compared to 27.6% in the comparative period. Meanwhile, the return on average equity for the quarter was 14.9% (59.6% annualized) compared to 9.9% same period last year.
Speaking about the result, the company CEO remarked
“BUA Foods Plc continues to deliver strong performance across key financial metrics despite the business climate headwinds characterized in Q1 by the economic impact of the general elections, high food inflation, and shortage of cash in circulation following the currency redesign policy. We continue to leverage our unique strategic business model to minimize the impact.
We are committed to remaining the most profitable business in our sector while creating long-term values for our stakeholders as we expand our frontiers.”.
Based on the information provided, the company’s strong revenue growth across its various divisions indicates a positive outlook for the company. The increase in revenue from the Sugar division by 71.7% is particularly significant and shows the company’s ability to generate significant revenue from its largest business segment.
The growth in the flour division and the pasta division also indicates that the company is diversifying its product offerings and gaining traction in these segments.
The company’s trailing earnings per share (EPS) of N6.05 shows that the company is generating profits for its shareholders. If the company continues to grow its revenue and profits, it is likely to have a positive impact on the share price, which has already increased by 85% in the past year. However, other factors such as overall market conditions and competition in the industry can also affect the company’s share price.