BUA Foods Plc (NGX: BUAFOODS) grew its revenue by 20.2% and profit after tax by 17.2% in the first nine months of the year ended September 30, 2022, according to the financial statements released by the company.
Review of Income Statement:
Revenue grew by 20.2% y-o-y to ₦289.8 billion in 9M 2022 (9M 2021: ₦241.1 billion). The growth due to a y-o-y increase of 17.0% in Sugar to ₦180.9 billion (9M 2021: ₦154.7 billion), 37% in Flour to ₦66.2 billion (9M 2021: ₦48.1 billion), and 12.0% in Pasta to ₦42.7 billion (9M 2021: ₦38.2 billion).
Gross profit increased by 14.5% to ₦94.2 billion in 9M 2022 (9M 2021: ₦82.2 billion) although gross profit margin deteriorated by 160bps to 32.5% in 9M 2022 (9M 2021: 34.1%), BUA Foods said the drop in gross margin is due to the increase in input costs.
Selling and distribution expenses increase by 32.3% to ₦10.4 billion in 9M 2022 (9M 2021: ₦7.8 billion) due to huge increase in cost of diesel within the period, according t the report.
Administrative expenses also declined by 18.3% to ₦4.4 billion in 9M 2022 (9M 2021: ₦5.5 billion) driven majorly by the decrease in general expenses (-61.4%) to ₦885 million in 9M 2022 (9M 2021: ₦2.2 billion) and Maintenance & Repairs (-31.4%) to ₦723.7 million in 9M 2022 (9M 2021: ₦1.1 billion).
Operating profit grew by 15.1% to ₦79.3 billion in 9M 2022 (9M 2021: ₦68.9 billion) benefitting from top line growth coupled with lower administrative expenses. Operating profit margin decline marginally by 400bps to 27% in 9M 2022 (9M 2021: 28.0%).
Finance cost drop marginally by 1.8% to ₦6.4 billion in 9M 2022 (9M 2021: ₦6.5 billion), the company said the drop is “due to efficient funding mix along business transaction.”
Profit before tax increased by 16.8% to ₦74.2 billion in 9M 2022 (9M 2021: ₦63.5 billion) although profit before tax margin decline by 80bps to 25.6% in 9M 2022 (9M 2021: 26.4%) due to increase in sales and distribution expenses.
Profit after tax increased by 17.2% to ₦68.7 billion in 9M 2022 (9M 2021: ₦58.6 billion) benefitting from a lower effective tax rate of 7.4% in 9M 2022 (9M 2021: 7.73%), while the Earning per Share (EPS) grew by 17.2% to N3.83 in 9M 2022 from N3.26 in the corresponding period.
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Review of statement of financial position:
Total assets increased by 6.3% to ₦630.4 billion as of 9M 2022 (FY 2021: ₦593.5 billion) driven largely by 121% growth in trade and other receivables which represents 18.3% of total assets.
The major component of the asset – Property, Plant and Equipment grew marginally to N323.62 billion from N321.68 billion in FY 2021.
Total liabilities grew by 8% to ₦423.9 billion as of 9M 2022 (FY 2021: ₦392.8 billion). This was driven mainly by a increase in contract liabilities (+46.5%: 14.2% of total liabilities). Trade and other payables which account for 14.7% of total liabilities increased by 61.8% to ₦62 billion as of 9M 2022 (FY 2021: ₦38.3 billion) and bank overdraft increased by 284.1% (2.6% of total liabilities).
Total equity increased by 2.9% to ₦206.5 billion as of 9M 2022 (FY 2021: ₦200.7 billion) mainly due to a marginal growth of 3.0% in retained earnings to ₦198.4 billion as of 9M 2022 (FY 2021: ₦192.7 billion).
Review of cash flow:
Net cash from operating activities grew by 437.8% to ₦103.7 billion as at 9M 2022 (9M 2021: ₦23.7 billion) due to changes in dues from related companies, changes in contract liabilities as well as inventory.
Net cash from financing activities was ₦93.7 billion in 9M 2022 (9M 2021: ₦27 billion) due to additional proceeds from borrowings of ₦35.2 billion, repayment of borrowings of ₦67.5 billion in 9M 2022 (9M 2021: ₦31.9 billion) and finance cost paid.
In its outlook BUA Foods said, “Recent environmental disruptions such as flooding impacting on logistics efficiencies, energy cost, rising input cost, coupled with rising FX concerns and tightening stance of the Central Bank of Nigeria which further interest rate by another 100bps to 15.5% are all core mitigating areas for us.
“We expect optimizing our supply value chain as we strive to increase market share across market regions. Furthermore, our rice division recommencement is on course as we continue to nourish lives and increase market reach. Our retail strategy remains a priority for us in the near term, while we drive to sustain the upward momentum of our export market strategy. We remain committed to reducing Africa insecurity issues while nourishing lives.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.