BUA Foods posted a pre-tax profit of N76.8 billion in the second quarter of 2024, reflecting a 24% year-on-year growth from the N61.8 billion pre-tax profit posted in Q2 2023.
According to the group’s unaudited financial statements for June 30, 2024, the group posted a revenue of N315.5 billion in Q2 2024, marking a 79% year-on-year growth from N176.6 billion as of Q2 2023.
The group’s second quarter it contributed to its first quarter to produce a half-year revenue of N672.3 billion, marking a 110% YoY growth from N320.9 billion as of H1 2023.
BUA Foods posted an FX revaluation loss of N27.4 billion during the quarter under review.
The group’s cost of sales outgrew the revenue, as it posted a N210.5 billion cost of sales in Q2 2024, marking a 106% YoY growth from N102.1 billion as of Q2 2023.
This led to a decline in gross margin, despite a 41% growth in gross margin to N105 billion, from N74.5 billion as of Q2 2023.
During the half-year, BUA Foods’ gross profit increased by 64% year-on-year to N218.4 billion in H1 2024, from N132.8 billion as of H1 2023.
In terms of gross margin, there was an 8.9 percentage-point decline year-on-year to 32.4%, from 41.3% in H1 2023.
Key Highlights Q2 2024 vs Q2 2023
- Revenue: N315.5 billion, +79% YoY
- Cost of sales: N210.5 billion, +106% YoY
- Gross profit: N105 billion, +41% YoY
- Gross margin: 33%, -900 bps YoY
- Operating profit: N99.5 billion, +51% YoY
- Operating margin: 32%, -500 bps YoY
- Net finance income: N4.7 billion, +212% YoY
- Profit before tax: N76.8 billion, +24% YoY
- Profit after tax: N75.1 billion, +37% YoY
- Earnings per share: N4.17, +37% YoY
- Total assets: N1.1 trillion, +3% YTD
Commentary
During the half-year, the company’s sugar sales hit N369.7 billion, up by 88% from N196.5 billion as of H1 2023. It also experienced a 164% year-on-year growth in flour sales to N227.9 billion from N86.05 billion as of H1 2023. The group’s pasta sales also recorded a 95% growth to N74 billion, from N37.9 billion as of H1 2023.
The group’s selling and distribution expense in H1 2024 was about N18.35 billion, marking a 43% YoY from N12.85 billion as of H1 2023. The growth is attributed to the rise in the cost of diesel during the half year.
In the six months, the devaluation of the Naira had an impact on the company’s finance costs, as it recorded an FX loss of N54.7 billion during the period.
There was a decline in BUA Foods’ loan profile, as its current bank borrowings declined to N363.2 billion as at H1 2024, from N649.7 billion at the end of FYE 2023. However, the group’s trade payables increased by 96% to N96.8 billion, from N49.3 billion as of FYE 2023.
The increase in trade payables was driven by an 88% increase in withholding taxes and VAT payables to N74.6 billion, from N39.7 billion as of FYE 2023.
BUA Foods vs other consumer goods companies
BUA Foods has displayed itself as the most profitable consumer goods company during the half year, as it maintained a strong profit profile during the period. Compared to Dangote Sugar, Flour Mills of Nigeria, Nestle Nigeria, among other consumer goods companies listed on the NGX, BUA Foods has the most profitable profile.
During the quarter ending June 30, 2024, the group posted a gross margin of 33%, compared to Dangote Sugar’s 5%, and Flour Mills of Nigeria’s 11%. However, Nestle Nigeria posted a gross margin of 35%.
In terms of profitability, BUA Foods was ahead, as it posted a pre-tax profit of N76.8 billion during the quarter, while Dangote Sugar and Nestle Nigeria posted pre-tax losses of N104.6 billion and N56.4 billion. FMN Plc posted a pre-tax profit of N7.4 billion during the period.
Commenting on the group’s results, BUA’s Managing Director, Dr. Ayodele Abioye attributed the group’s performance to the launch of new products as well as the expansion into new markets. He also identified cost optimization as a factor responsible for the group’s performance.
He noted, “During this period, we have made significant strides in executing our strategic plans, successfully launching new products, specifically, macaroni, premium pasta and semolina to meet the yearnings of our customers.”
“Our diversified portfolio and expansion into new markets impacted revenue growth while strengthening our partnership with key stakeholders We also maintained a strong focus on cost optimization, resulting in sustained margins and profitability.”