Despite economic headwinds, Nigeria’s leading food manufacturing company BUA Foods has released its 2023 first-quarter earnings showing a profit before tax rose a whopping 85% to N49.5 billion.
The impressive growth in profit follows a string of stellar performances spanning the last two years since it became a publicly listed company on the Exchange.
Its top-line revenue rose to 60.3% to close at N144.3 billion providing enough buffer to absorb rising operating costs. The group’s revenue came from all its 7 major business segments, with every single one of them posting revenue growth quarter on quarter.
Also, earnings per share rose from N1.27 to N2.25 in the period under review.
It’s Sugar businesses which include fortified, non-fortified, and molasses contributed N93 billion to revenues compared to N54.1 billion in the same period in 2022 while Sales from its fortified segment doubled to about N61 billion.
Also contributing significantly to topline revenues is its Bakery Flour business which grew from N18.3 billion to N29.6 billion in the period under review. The company owns an energy-saving and waste-reduction type flour mill in Port Harcourt built for efficiency.
BUA Pasta’s business which involves the processing, manufacturing, and distribution of pasta such as its IRS premium and slim products also delivered impressive revenue growth. Revenues for the division also rose from N15.9 billion to N19.4 billion.
Despite the rise in revenues the company also faced significant cost pressures as its cost of sales rose by 42% to N87.6 billion, albeit lower than the pace of revenue growth. In its 2022 audited accounts, it reported that it experienced a rise in raw materials and energy costs pushing
Another major margin pressure was in its operating expenses which rose 3 folds to N9.2 billion. It was driven by a spike in its selling and distribution costs. The company spent N6.2 billion on selling and distribution, compared to just N708 million in the prior year, as it focused on an aggressive sales strategy.
Despite the rising input and operating costs, BUA Foods still earned a profit margin equivalent to N27.9 for every N100 of sales, compared to N25.3 reported in the corresponding quarter in 2022.
BUA Foods’ first quarter result is the best since the company was listed in 2021, helping it retain its title as the most profitable food manufacturing company on the Exchange.
Asides from almost doubling its earnings per share to N2.25, it also generated cash of N34.9 billion in net operating cash flow deploying about N7.4 billion of the cash to repay loans.
Cash at the end of the period rose from N27.6 billion in December 2022 to N50.3 billion as of March 2023.