BUA Foods PLC Achieves ₦418.4 Billion Revenue and ₦91.3 Billion Profit After Tax in 2022, Despite Challenges
- What was one key challenge faced by BUA Foods in 2022, and how did they handle it?
- One major challenge BUA Foods faced in 2022 was the devaluation of the Naira against the USD, which disrupted its procurement of imported materials and machinery. To overcome this, they adopted strategies like revenue diversification, investment in capacity expansion, and careful balance sheet management for enhanced liquidity.
Financial Performance Summary
- BUA Foods maintained a solid financial performance in 2022, despite continuous disruptions in the business climate.
- Revenue achieved was ₦418.4 billion, with profit after tax reaching ₦91.3 billion.
- There was a 14% growth in return on equity to 39.6%, maximizing shareholder returns.
- Aggregate volume sold declined by 5% to 889,616 MT due to energy supply issues.
2022 Challenges
- Affected by Russia-Ukraine war, inflation rise, and multiple increases in the CBN’s MPR.
- Suffered from Naira’s devaluation against USD, leading to issues regarding imported materials and machinery procurement.
- Strategies to cope included diversifying revenue, expanding capacity, and managing balance sheet for better liquidity.
Income Growth and Diversification
- Recorded a 25.5% increase in revenue, with growth in sugar, pasta, and flour divisions.
- Announced plans for the commercial launch of a rice division in 2023.
- Last quarter sales remained the highest contributor to the annual revenue.
Cost Management
- Despite numerous economic challenges, BUA Foods managed its cost base efficiently.
- Cost of sales grew by 23.9%, in line with the inflationary environment.
Value to Shareholders
- Total shareholder return was 67.9%, including share price gains and dividends.
- Share price rose by 62.5%, paid out 90.3% of profits after tax as dividends.
- Return on equity appreciated by 14% to 39.5%, and Return on assets grew by 25% to 15.0%.
Liquidity Improvement
- In addition to reducing short- and long-term borrowings by 28.9% and 13.7%, respectively, the company also improved its liquidity by efficiently managing its working capital.
- A noticeable increase in trade and other receivables which rose by 128.8% led to reducing the overall receivable days and inventory turnover by 75.3% and 3.7%, respectively.
Future Plans
- Despite expected continued challenges, BUA Foods foresees growth and increased profitability.
- The company plans on focusing on revenue growth, leveraging production assets, market expansion, and cost-of-production efficiencies.
Useful links
About BUA Foods PLC (BUAF.ng)
BUA Foods is a leading food and fast moving consumer goods (“FMCG”) business, which processes, manufactures, produces and distributes food materials such as sugar, flour, pasta, rice, and edible oils as well as packaged foods. The Company’s products currently include fortified and non-fortified sugar, flour for large and small scale use, and pasta. In addition, the Company expects to commence the processing, manufacturing, production and distribution of rice by 2022 and edible oils by 2024. BUA Foods business operations comprise of five divisions, which include Sugar, Flour, Pasta, Rice, and Edible Oils. BUA Foods’ products are distributed to customers across Nigeria with a strong potential for expansion into West Africa. BUA Foods Plc is listed on the Nigerian Stock Exchange
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