BUA Foods, a leading Nigerian food conglomerate and a subsidiary of BUA Group has recorded N111.536 billion Profit After Tax (PAT) in its full-year 2023 financial result amidst economic headwinds.
According to the company, it adeptly handled its production costs by leveraging the advantage of locally sourced raw materials, facilitated by its vertical integration strategies.
Speaking at a media round table in Lagos recently, Engr. (Dr.) Ayodele Abioye, Managing Director at BUA Foods Pls restated the company’s commitments to scale up its efforts to bolster food security, reduce security, reduce risks, and strengthen food systems over the short and long term this year.
He added that food security is the most important mission at the heart of BUA Foods’ existence. According to him, “It shapes the Company’s strategic direction and operational ethos towards fulfilling Africa’s food demands and improving the well-being of individuals and communities. This steadfast commitment to food security has distinguished BUA Foods and positioned it as an important player in Nigeria’s dynamic food sector and beyond. The Company has achieved a record market capitalization of over N5 trillion post-consolidation and listing on the Nigerian Exchange (NGX).
“Driven by a strategic vision to fortify its presence in the agribusiness and food processing sector, BUA Foods strategically consolidated its diverse food businesses into a unified entity and listed by introduction on the Nigerian Exchange (NGX) two years ago. This strategic decision not only streamlined operations but also bolstered the company’s capacity to capitalise on the growth opportunities and export potential presented by the African Continental Free Trade Area. By consolidating its business divisions, including Rice, Pasta, Flour, Edible Oils, and Sugar, alongside two wholly owned subsidiaries, BUA Foods plays a pivotal role in driving economic growth, producing high-quality foods and creating long-term value for all stakeholders.”
He further explained that in 2023, BUA Foods Plc achieved a significant year-on-year revenue growth of 74.1%, contributing to an impressive four-year compound annual growth rate (CAGR) of 39.41%. According to him, the sustained revenue growth in 2023 was instrumental in upholding a robust gross profit margin for the company that was boosted by the company’s resilience and strength to overcome foreign exchange challenges to achieve impressive results.
He emphasised that the key driver of the group’s revenue in the 2023 financial year emanated from the sale of fortified sugar products, accounting for N327.545 billion as against N129.242 reported in 2022 representing a growth of 153.44%, while the segment contributed to 44.96% of the total revenue of N728.447 billion.
Also, sales of bakery flour followed with N200.361 billion a notable surge of 151.43% compared to the N79.687 billion generated by the segment in the previous year, 2022, while the segment also contributed 27.50% of the total revenue achieved by the group.
He said, “This is a solid performance in the face of an unending challenging macro environment.
“BUA Foods delivered strong growth by scaling up its efforts to bolster food security, reduce security, reduce risks, and strengthen food systems over the short and long term, despite the persistent devaluation of the naira during the period, which led to a substantial and negative impact of foreign exchange losses.
Having made crucial investments to expand and solidify its presence across-the-board, Ayodele said the company’s unique business model and operational mechanism is geared towards optimizing capacity utilisation to achieve sustainable financial success.
He added that the five business divisions of BUA Foods have demonstrated remarkable growth. “Notably, the Flour business witnessed a substantial expansion in production capacity, increasing from 500,000 Metric Tonnes (MT) to 1,220,000 MT. At the same time, the Pasta division saw its capacity rise from 250,000 MT to 500,000 MT between 2021 and 2023. These growths translated into revenue increases, with Flour recording a remarkable 152% surge and Pasta achieving a notable 54% growth in 2023 relative to previous year.
“Additionally, BUA Foods embarked on developing its rice business during this period, with initial production capacity of 200,000 MT leveraging its commitment to utilising locally sourced raw materials. This strategic approach not only supports national development plans but also fosters the advancement of Nigeria’s local rice industry, ultimately enhancing the economic prospects of local communities.
“Despite maintaining a consistent production capacity of 1,500,000 MT since 2021, the Sugar business remains one of the largest sugar refineries in West Africa and achieved an impressive 53% growth in revenue, underscoring its significance within the region’s sugar industry landscape, “he said.
In a related development, Ayodele also disclosed that the company has invested over $200m in its integrated sugar estate in Lafiagi, Kwara State.
He revealed that the company was investing in the project comprising a sugar refinery, ethanol plant and other supporting infrastructure to reduce dependence on forex-impacted raw materials. He said, “The bulk of our raw materials are FX-dependent, which is a major issue. As it stands today, Nigeria is yet to be an industrial agricultural producer of sugarcane, which is a major source of raw material for us.
According to Abioye, the BUA sugar estate in Lafiagi is sitting on about 20,000 hectares of land space, an integrated project that has a combination of cultural estate and 20,000 metric tonnes of refinery, 15,000 tonnes of crushed canes daily capacity. “It has an industrial ethanol plant, and of course, you have supporting infrastructure; schools, and estate that we are building as well. There is also an airport, a three-kilometre airport. We have spent more than $200m so far.
“We are accelerating that space to see how we can reduce our dependence on forex. It is not going to be everything but at least it is a good step in the right direction. Also with the government’s support,” he stated.
According to the BUA Foods boss, the firm is in the process of extending this to other communities, to push for self-sufficiency in terms of supply of local materials.
Also, BUA Foods, he stated, remains dedicated to its sustainability initiatives, actively engaging with host communities and prioritising responsible production practices to minimise its environmental footprint. “From reducing water consumption to improving air quality and mitigating noise pollution, BUA Foods continues to demonstrate its commitment to environmental stewardship while fostering positive relationships within its communities, “he added.
Projecting into the future and restating the commitment to the success of the business, Chairman of BUA Foods, Abdul Rabiu noted, “As BUA Foods embarks on its journey towards continued success, it remains firmly poised to navigate future growth and expansion with confidence and foresight. With a solid foundation and a clear vision guiding our path forward, we plan to leverage emerging opportunities to deliver sustained value for the foreseeable future.”
He further said the Company is committed to enhancing internal efficiencies to optimise costs and enhance profitability, ensuring a robust financial performance moving forward.
Also, BUA Foods MD stated, “in 2024 we believe our business structure and strategy position us to continue winning in the marketplace. We will focus on driving top-line growth in alignment with our established growth model, leveraging ongoing capacity expansion with product/pack innovation for sustainable growth in the short and long-term.”
BUA Foods Plc. is a leading food business with well-diversified and scalable operations producing sugar, flour, pasta, rice and edible oils. The Company owns strategically located plants across Nigeria and a cordial alliance with local stakeholders in host communities. Additionally, BUA Foods is a resilient business built on a strong brand proposition and an operator with a well-known reputation for delivering high-quality products.
BUA Foods continues to invest in modern technology for efficient food production, innovatively expanding with strategic partners across the value chain. The Company is also well-positioned to leverage significant export potentials across West Africa and the larger African continent.
Headquartered and listed in Nigeria, BUA Foods is one of the most capitalised companies on the NGX Exchange and a leading consumer goods firm by market value.