BUA Foods H1: Sales Loss Worsens, But Profit Climbs to ₦292bn

Despite declining sales revenue in Q2 2026, BUA Foods Plc improved profits and expanded margins through aggressive cost-cutting, demonstrating disciplined management in a challenging environment.

The food producer’s interim financial report for the half-year ended June 2026 reveals a worsening sales decline rather than a rebound. Group sales revenue dropped quarter-on-quarter, with Q2 revenue at ₦370.5 billion—down from ₦394 billion in Q1. The year-on-year decline in sales nearly doubled, from 11 per cent in Q1 to over 21 per cent in Q2.

Despite this, profit rose: group net profit climbed from ₦142 billion in Q1 to nearly ₦150 billion in Q2, representing year-on-year increases of 13.6 per cent and 13.3 per cent, respectively. In volume terms, BUA Foods lost roughly ₦100 billion in Q2 sales revenue year-on-year but grew net profit by over ₦18 billion, signalling even more intensive cost control.

The revenue drop was broad-based across key product lines, led by bakery flour (down ₦95 billion to ₦257 billion) and fortified sugar (down ₦46 billion, or 15 per cent, to ₦258 billion). Together, these two lines accounted for more than 67 per cent of group revenue at half-year.

Managing Director Engr. Ayodele Abioye attributed the resilient results to effective cost management and agility in navigating a difficult operating environment. Margins expanded, and profit grew despite sharp revenue losses—reflecting the company’s ability to pass the impact of lost sales to other stakeholders, a trend established in Q1.

A key factor was a dramatic 37% drop in cost of sales to under ₦183 billion in Q2—well exceeding the 21% drop in sales. Production cost per unit fell from 62 kobo to 49 kobo, expanding gross margin from 38% to 51% and enabling gross profit to rise from ₦9.4 billion to ₦187.6 billion.

Selling and distribution expenses, which had surged 42% in Q1, fell almost 36 per cent in Q2, yielding over ₦8 billion in cost savings. Administrative expenses also dropped, while other income grew, pushing operating profit margin up from 31 per cent in Q2 2025 to 44.8 per cent in Q2 2026. Operating profit for the quarter grew 13.7 per cent year-on-year to almost ₦166 billion.

Net finance expenses decreased 22 per cent to ₦4.8 billion, further stretching pre-tax profit growth to over 15 per cent for the quarter, closing at ₦161 billion.

At half-year, BUA Foods’ turnover declined ₦147.4 billion (16%) to ₦765 billion, but this was more than offset by a steeper ₦171 billion (30%) drop in cost of sales, which closed at under ₦402 billion. Gross profit rose ₦24 billion (7%) year-on-year to over ₦363 billion.

With further cuts in selling, distribution, and administrative expenses, plus high other income, operating profit increased by ₦35.7 billion (12.5%) to ₦320.5 billion for the half-year. Net finance cost dropped by 38 per cent to ₦5.6 billion, extracting ₦3.5 billion in savings. Pre-tax profit rose 14 per cent to nearly ₦315 billion.

BUA Foods closed the half-year with a net profit exceeding ₦292 billion, a 12.4 per cent increase year-on-year. Earnings per share climbed to ₦16.24, up from ₦14.45 in H1 2025.

Summary:

Despite intensified sales losses, BUA Foods’ aggressive cost reductions and margin expansion allowed it to deliver double-digit profit growth, highlighting a strategy of shielding shareholders’ value through disciplined expense management.