…sugar division contributes 58%
In spite of the economic headwinds of 2023, characterised by policy changes on the part of the new central government, in particular, the removal of petroleum subsidy and naira float, which resulted in high inflation, BUA Foods, maker of sugar, flour, pasta and rice, had a very good outing in the year that just ended, as it recorded impressive results.
Gross revenue in 2023, rose by 74 percent to N729.44 billion, up from N418. 34 billion in 2022. Gross profit was up by 96 percent to N260.46 billion in 2023, compared to N132.79 billion the firm realised in 2022. That was despite the 64 percent increase in the firm’s cost of sales, which hit N468.98 billion last year, up from N285.56 billion in the year before.
Effectively, BUA Foods’ gross margin, which is gross profit expressed as a percentage of gross revenue, increased to 35.7 percent, compared to 31.7 percent in the year before. What this metric means is that out of every N100 revenue BUA Foods generated, N35.70 amounted to gross profit in 2023 as against N31.70 in 2022.
Confirming the impact of the inflationary trend in the country last year, selling and distribution expenses rose by 110 percent to N29.85 billion, from N14.19 billion in 2022.
Total operating expenses increased by 43 percent to N47.06 billion as against N32.92 billion in 2022. The firm recorded an operating profit of N206.32 billion last year, representing 75 percent increase over N117.49 billion in the previous year.
Finance cost skyrocketed by 1,031 percent to N98.18 billion, a manifestation of the impact of Nigeria’s high interest rate regime on the players in the real sector. In 2022, BUA Foods’ finance cost was just N8.68 billion.
Commenting on the 2023 performance of the firm, Engineer Ayodele Abioye, managing director of BUA Foods, attributed the impressive results to their ingenious expansion efforts executed by the company.
He said: “2023 witnessed a very challenging operating environment characterized by macroeconomic headwinds. We were able to navigate these challenges leveraging our unique strategic business model to deliver a strong performance as the top line grew by as much as 74%, with gross profit leaping by 96% while total assets increased significantly. This is a reaffirmation of our commitment to drive shareholder value underpinned by our unique capabilities as a strong, diversified and scalable food business.
“Expansion efforts across all frontiers continues to crystallize in supporting growth as we accelerate our strategy to become a leading food brand on the continent. We continue to drive efficiency through our integrated supply chain system by leveraging economies of scale in alignment with market expansion efforts towards fulfilling the increasing demand of customers.”
Profit after tax for the period rose to N112.09 billion, which amounted to an increase of 23 percent over N91.34 billion realised in 2022.
The sugar segment of the company contributed 58 percent of the company’s revenue; flour segment, 30 percent; pasta segment, 12 percent while the budding rice segment contributed the rest.
“The rice division debuted in 2023 contributing marginally to revenue. A 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 commercialisation, however, we are working with local farmers to bolster the effectiveness of the paddy supplies and optimize operations in 2024,” BUA Foods said.
In 2024 and beyond, the company is hopeful it will create long term value for its shareholders.
“Looking ahead, we remain committed to unlocking opportunities for sustained and improved business performance while being confident in our strategic plans for the year 2024.Creating long-term value for all stakeholders is an imperative, even as we stay true to our creed of nourishing lives,” Abioye added.
