How BUA Foods Grew Profit to N142bn from Falling Sales

BUA Foods’ stable growth in sales revenue lost the track in the first quarter but the company’s management hammered costs to keep profit climbing. 

While sales revenue closed almost 11 per cent down to N394 billion, the food producing company raised the bottom line by 13.6 per cent year-on-year to over N142 billion for the period. 

This represents a loss of N47.4 billion in sales against a gain of over N17 billion in net profit, effectively shielding the loss of sales revenue from hurting the wealth of shareholders.

These developments are contained in the company’s interim financial report for the first quarter ended March 2026. 

Commenting on the operating results, the company’s managing director, Ayodele Abioye, points to the organisation’s resilient operating model and disciplined execution that define the path to delivering high value to shareholders.  

How the company’s management passed on the revenue losses and cost increases to other stakeholders but increased the portions of shareholders sums up the earnings story in the first quarter.

In the same quarter in the previous year, the company grew sales revenue by about 24 per cent or over N85 billion to N442 billion and extracted gross profit of under N161 billion for the quarter.

In the current year, despite the loss of over N47 billion in sales in the first quarter, the company expanded gross profit to the region of N176 billion. This reflects an improvement in the gross margin from 36.4 per cent to 44.5 per cent over the period.

This means the company was able to pass on to the providers of production inputs much more than all the revenue losses it suffered during the period. This is confirmed by a drop of N62 billion or 22 per cent in cost of sales– twice as fast as the drop of 11 per cent in turnover.

The only rising cost pressure during the review period came from inflation-driven selling and distribution expenses that rose by a surprising 42 per cent to N15.6 billion year-on-year against the drop in sales. 

This means the providers of the means of selling and distribution of the company’s products were able to pass on their own increased costs to the company. The average cost of selling and distributing the naira of the company’s products increased from 25 kobo to 40 kobo over the period.

However, the additional cost of N4.7 billion incurred in selling and distribution expenses was more than recovered from a big slash of administrative expenses. This means the company succeeded in dropping these expenses at the door steps of the providers of its administrative services. 

Administrative cost dropped by N5.5 billion or 48.5 per cent year-on-year to close at N5.8 billion for the first quarter. Added to the cost saving is an increase of 43.6 per cent in other income to N596 million both of which boosted operating results.  

Operating profit grew by 11 per cent to stand at N154.7 billion at the end of the first quarter, reflecting an increase in operating profit margin from 31 per cent to 39 per cent over the period.

Further cost saving was extracted from finance expenses, which dropped by N2.7 billion or 72 per cent to close at slightly over N1 billion for the quarter. This means providers of finance to the company got their share of operating profit reduced during the period. 

The company’s borrowings went down by less than 2 per cent to N385 billion from the closing figure in 2025. 

Cost saving was also extracted from income tax expenses that closed flat for the quarter at N11.4 billion against an increase of 12.7 per cent in pre-tax profit to N153.8 billion.

With four-level cost saving, BUA Foods more than compensated for its loss of sales revenue in the first quarter and therefore prevented the impact of loss of sales from reaching the bottom line.

Net profit of N142 billion for the quarter represents an increase of N17 billion in the coffers of shareholders. 

The ability to build wealth for shareholders despite the odds speaks loudly of good management quality.

Will sales revenue pick up for the company in the second quarter or will cost cutting to defend the bottom line continue or fail will be the developments to watch out for on BUA Foods in the upcoming interims. 

The company closed the first quarter with earnings per share of N7.91, improving from N6.96 per share in the same period in 2025.