BUA Foods builds N16 bn profit with record gains from sugar business

BUA Foods posted a profit jump of 6.68 percent for the nine months to September, according to its unaudited financials, an improvement hinged on a 152.6 percent surge in its earnings from sugar business.

The food processing company runs five units – sugar, edible oil, pasta, flour and pasta – all of which it combined into a single entity before it listed in Lagos this month.

But only sugar and other derivative products were noted as income sources in the earnings report posted by the Nigerian Exchange, while earnings from the other four units were unaccounted for.

“Three of our five business divisions, namely sugar, flour and pasta, are currently and fully operational and are contributing to our current revenue stream,” Acting Managing Director Ayodele Abioye told an investors and analysts call on Tuesday.

BUA foods recorded a 152.6 percent increase in the sales of non-fortified sugar while fortified sugar saw a 57.6 percent decline and an increase of 135 percent in molasses sales.

Their non-fortified sugar increased to N52.51 billion compared to N22.8 billion sales recorded in the first nine months last year. This however cannot be said of the fortified sugar as sales fell to N22 billion from N51.7 billion in the comparable period last year while their sales in molasses increased to N221.7 million from N94 million in the previous period last year.

Non-Fortified sugars are sugars that do not contain any added vitamins or minerals, fortified sugars contain synthetic vitamins added during the manufacturing process to boost the nutrient content while Molasses is thick, dark brown juice obtained from raw sugar during the refining process. It is one of the by-products of sugar cane.

Read also: RMB Nigeria advises BUA Foods on its listing by introduction on NGX

The sales of these three divisions of BUA foods led to a 6.8 percent increase in total revenue of N79.7 billion in the nine months financial report of 2021, compared to N74.6 billion earned in the same period last year.

Contributing their sales to market acceptance by the public, Abdulrasheed Olayiwola, chief financial officer, BUA Foods Plc at the Introduction to listing held on Tuesday said, “Our revenue growth is simply due to our product market acceptability.”

On November 25, 2021, there was restructuring implemented by way of a scheme under Section 711 of Companies and Allied Matter Act (CAMA), among BUA Sugar Refinery Limited, IRS Flour Mills Limited, IRS Pasta Limited, BUA Rice Limited, BUA Oil Mills Limited, and BUA Foods Limited.

BUA Sugar Refinery Limited emerged as the surviving entity of the restructuring and subsequently, its name was changed to BUA Foods Plc. The “Rice Division” is now the rice business of BUA Food.

As part of the Restructuring, the name of the enlarged entity was changed to BUA Foods with its operations reorganised into five business divisions: Sugar, Flour, Pasta, Rice, and Edible Oils. In December 2021, the Company was converted into a public limited liability (PLC) company. BUA Foods is affiliated with diverse group companies under the BUA brand that span the food and infrastructure sectors

The most capitalised food company expects to see a surge in revenue over the years as it intends to produce more than double of its flour and pasta capacity this year, commission its sugar plantation next year, and also reactivate its rice facilities which is the largest so far in the country.

The foods company saw a 6.7 percent increase in its nine months profit after tax to N16.6 billion from N15.5 billion while their profit margin stood at 20.8 percent.

Other income for BUA foods surged to N1.1 trillion in the first nine months of 2021 from N7.8million in the comparable period of 2020.

Their administrative expenses declined to N1.4 billion nine months to September 2021, compared to N2.4 billion in the same period of the previous year. However, their finance charges increased to N5.8 billion in the same period of 2021 from 3.4 billion recorded in 2020.

The company’s total assets grew by 4 percent to N367.6 billion as of September 2021 from N348.6 billion as of December 2020.

Additionally, as of Friday 14th January, BUA Foods became the largest company by market capitalization in the consumer goods sector, increasing the total equity market capitalization by over 4percent with a market cap of N1.16 trillion.

From eleven-month to November 2021, BUA Foods Plc revenue grew by 58 percent from N193 Billion in 2020 to N304 Billion in November 2021. Also, gross profit grew from N64.9 billion in 2020 to N96.2 billion in 2021 while Pre-tax profit rose from N49.6 billion in 2020 to N78.8 billion in November 2021.