BUA Foods Plc defied the general election-induced slowdown in economic activities in the first quarter and combined margin improvement with growing sales to lift profit a clear 77 percent to N40.5 billion for the quarter.
Counting on the company’s strategic business model, the company’s chief executive officer, Engr. Ayodele Abioye is betting to keep the adverse economic impacts on the business subdued and maintain his company’s position as the most profitable in its sector.
In his comment on the company’s improved first-quarter earnings results, Abioye promised to leverage the company’s unique strategic business model to minimise the headwinds in the business climate, expand frontiers and build long-term values for stakeholders.
The profit figure for the quarter is already over 44 percent of the full-year profit of N91.3 billion in 2022 – which defines a strong footing for an outstanding performance for the food-producing company this year.
BUA Foods’ unaudited financial report for the first quarter ended 2023 shows a strong gain in momentum in sales revenue with turnover speeding up from 25.5 percent growth at the end of last year to over 60 percent increase quarter-on-quarter in the first quarter.
The increase represents additional sales revenue above N54 billion raked in over the review period. The company produces sugar, flour, pasta, rice, and edible oils.
The sugar business is both the main revenue provider and the growth driver with an increase of close to 72 percent quarter-on-quarter to over N93 billion at the end of the first quarter.
The flour segment follows with an increase of almost 58 percent in sales revenue to N31 billion and the pasta line also grew by about 22 percent to N19.4 billion.
The company’s report shows a major increase in the cost of sales at almost 42 percent quarter-on-quarter to ₦87.6 billion – which it said was driven by increases in the cost of raw materials and energy.
The company stated that the high input cost environment and further devaluation of the naira against the dollar raised prices of raw materials and consequently the cost of production.
Despite the major increase in input cost, there was a relative slowdown in cost per unit of sales compared to the stronger growth of 60.2 per cent in sales revenue over the same period. This improved the gross profit margin from 31.4 percent to 39.3 percent over the review period.
Gross profit doubled quarter-on-quarter to ₦56.7 billion at the end of the first quarter, reflecting the gain in margin.
A major challenge came from selling and distribution expenses that multiplied nine times to ₦6.3 billion – which the company attributed to an increase in the cost of diesel.
The increase in selling and distribution costs claimed a good part of the cost saving from the cost of sales and lowered the margin of increase in operating profit to less than 82 per cent to close at N48 billion for the quarter.
The operating profit margin still improved from 29.4 percent to 33.4 percent over the review period.
An increase of 28.6 percent in net finance cost did not add to the pressure from the side of cost and with a moderate improvement in other income to N401 million, the company was able to grow pre-tax profit by 85 percent to almost N46 billion at the end of the first quarter.
BUA Foods closed the first quarter operations with earnings per share of N2.25, improving from N1.27 per share in the same quarter in 2022. It earned N5.07 per share at the end of the 2022 operations and paid a cash dividend of N4.50 per share.
Comments are closed.