Kayode Tokede
Despite macro economic challenges, BUA Foods Plc posted a significant increase in revenue that drive profit and probably impacted shareholders’ return. However, the company has not announced dividend pay out to shareholders.
The food business with well diversified and scalable operations producing sugar, flour, pasta, rice and edible oils in its unaudited result and account for the full year ended December 31, 2023, declared the top-bottom line impressive performance to reflect effective management and cost efficiency.
In the period under review, the company declared N728.5 billion revenue, representing an increase of 74 per cent from N418.3 billion reported in the 2022 financial year (FY).
The revenue growth was due N421.5 billion generated from its Sugar business in 2023 from N275.2 billion reported in 2022, contributing 58 per cent to revenue in 2023 from 66 per cent in 2022.
Revenue from Flour segment rise to N216.9 billion in 2023 from N85.9 billion in 2022 while Pasta revenue rise to N87.9 billion, an increase of 54 per cent from N57.2 billion reported in 2022.
The increase in revenue is due majorly to price adjustments within the period. Volume sold increased marginally by five per cent to 635,519 tons within the period from 607,218 tons in corresponding period.
The growth in flour’s revenue is due both to volume increase and price adjustment within the period. Contribution margin also increased to 27 per cent from 18 per cent for the same period last year due to higher selling price.
On pasta division, the increase in sales volume is due to gradual commissioning of new pasta production lines. There was also a 16 per cent increase in production volume to 129,062 tons in 2023 from 111,577 tons in 2022.
In addition, rice division was debuted in 2023 contributing marginally to revenue. The total of N2.1 billion was generated from its operations. The challenges in the paddy supply chain for rice production affected the plans for full commercialization, however, we are working with local farmers to bolster the effectiveness of the paddy supplies and optimize operations in 2024.
However, the group reported N477.14 billion cost of sales in 2023, an increase of 67 per cent from N285.55 billion in 2022, driven by an increase in raw materials cost and energy cost.
The high input cost environment and further devaluation of the Naira against the US Dollar weighed heavily on prices for raw materials. This resulted in higher cost of production.
BUA Foods saw its gross profit increased by 89per cent to N251.32 billion in 2023 as against N132.79 billion as gross profit margin appreciated by 280 basis points to 34.5 per cent in 2023 from 31.7 per cent due to the slight selling price adjustment within the year.
Total operating expenses increased by 20 per cent to N39.7 billion in 2023 compared with N32.9 billion in 2022 and it is on the back of increase in selling and distribution cost along the supply chain to customers.
The breakdown of total operating expenses revealed that selling and distribution expenses increased by 98 per cent to N28 billion in 2023 from N14.1 billion reported in 2022 and it is due to huge increase in cost of diesel within the period.
In addition to operating expenses, administrative expenses closed 2023 at N11.6 billion, a decline of 38 per cent from N21 billion reported in 2022, driven majorly by the decrease in general expenses (-58 per cent) to N2.23 billion in 2023 from N5.38 billion reported in 2022.
BUA Foods’s operating profit was at N213.2 billion in 2023, a growth of 82 per cent from N117.44 billion in 2022, from top line growth driven by price adjustment and volume increase due to capacity expansion for IRS.
It brings BUA Foods operating profit margin to 29 per cent in 2023 from 28 per cent in 2022.
The Group announced N18.89 billion finance charges in 2023, representing an increase of 116 per cent from N8.68 billion in 2022 as Finance Exchange loss was at N73.6 billion in 2023.
The group announced N120.8billion profit before tax in 2023, a growth of 12.6 per cent from N107.2billion reported in 2022 as profit before tax margin stood at 16.6per cent in 2023 from 25 per cent in 2022.
BUA Foods profit after tax grew by 22 per cent to N111.5 billion in 2023 from N91.3 billion in 2022, while the Earning per Share (EPS) grew by 22 per cent to N6.20 in 2023 from N5.07 in the corresponding period.
Total assets increased to N734 billion as of December 2023, representing an increase of 21 per cent from N607.2 billion reported in 2022, driven largely by strategic transactions in trade and other receivables.
The breakdown of BUA Foods’ total assets showed that total non-current assets increased to N358.9 billion in 2023 from N330.55 billion in 2022, while total current assets stood at N375.19 billion in 2023 from N276.67 billion in 2022.
The Group’s total liabilities increased by 25 per cent to N472.5 billion as of December 31, 2023 from N376.2 billion reported in 2022FY.
Total equity increased to N261.4 billion as of December 31, 2023 from N376.2 billion in 2022, mainly due to a significant growth of 13 per cent in retained earnings to N253.4 billion as of December 31, 2023 (FY 2022: N222.9 billion).
Amid significant unaudited result and accounts for full year ended December 31, 2023, BUA Foods stock price has witnessed steady increase, closing February 25, 2024 at N379.9 per share.
This year alone, the stock price of BUA Cement has appreciated by 96.4per cent. The stock price opened for trading this year at N193.4 per share to reach its 52-week high February 25, 2024 at per share.
Reacting on the 2023 unaudited result and accounts, the Managing Director, BUA Foods, Dr Ayodele Abioye in a statement said: “This is a solid performance in the face of an unending challenging macro environment.
“BUA foods delivered strong growth despite the persistent devaluation of the naira during the period, which led to a substantial and negative impact of foreign exchange losses. Despite the margin squeeze on operating profit to 82per cent, our business remained resilient to deliver bottom line growth of 22per cent to N111.5billion.
“Our expansion strategies across all frontiers continue to crystallize in supporting growth. We remained committed to accelerating delivery in alternative and local raw materials sourcing across all our operating units, this is including the BIP project for sugar development as a softening opportunity to rely less on forex.
“As we look ahead, our integrated supply chain execution strategy will continue to be strengthened to sustain the delivery of growth across our financial metrics. We are confident in our plans for the year 2024 in the face of the business climate uncertainties.”
