BUA Foods has recorded an increase in cost of sales driven by higher raw materials and energy costs, a situation partly attributed to the naira devaluation and removal of subsidies on fuel and power.
The firm’s cost of sales grew 110 percent despite its revenue growth in 2024.
“In line with its revenue growth, BUAFOODS experienced a 110 percent year-on-year (YoY) increase in production costs, driven primarily by sharp increases in raw material (+104.4 percent YoY) and energy (+257.1 percent YoY) prices,” a report from CardinalStone research stated.
“These cost pressures were largely attributed to the Naira’s devaluation during the period under review,” it added.
In 2024, the naira depreciated by 41.0 percent year-on-year, shooting up costs of essentials needed for production – raw sugar and diesel— both of which are imported and priced in US dollars.
BUA Foods’ cost of sales increased to N984.9 billion from N468.9 billion, where raw materials cost stood at N914.8 billion, energy cost stood at N51.6 billion, other factory expenses at N9.65 billion, and depreciation at N8.9 billion.
Revenue grew to N1.53 trillion from N729.4 billion while after-tax profit increased to N274.9 billion from N112.1 billion.
The company’s revenue surged by 109.3 percent driven by strong sales growth across key product segments, optimised pricing strategies, and enhanced cost management measures.
Read also:BUA Foods profit rises by 145.3% as revenue hits N1.53trn
“Despite significant macroeconomic challenges, our business navigated the resulting impact on supply chain costs and foreign exchange losses effectively,” Ayodele Abioye, the managing director of BUA Foods said while commenting on the financial results.
“The cumulative impact of our expansion strategy has enabled our capability to fulfil increased demand from our customers and enhanced internal operational efficiencies. BUA Foods achieved an aggregate volume growth of 18 percent across all divisions. The firm’s share price stood at N415 on February 3, 2024.
Earnings per share rose by 145.1 percent to N15.27 per share, which was driven by increased sales across multiple product segments. This underscores the company’s ability to drive value creation for shareholders.
BUA Foods ended the 2024 financial year with a record of N3.99 trillion Year-to-Date (YtD) gain in market capitalization, closing the year at N7.47 trillion.
The company’s share price surged by 114.6 percent YtD, closing at N415 which signals moderation from the 197 percent YtD gain recorded in 2023.
Despite this, strong fundamentals continue to strengthen investor confidence as revenue surged 1o4 percent in the first nine months of 2024.
The company’s price-to-earnings ratio which stood at 35 percent reflects strong investor confidence and low share price volatility.
Trade and other payables grew to N116.2 billion, driven by withholding/value-added tax payables of N97.2 billion, trade creditors of N17.8 billion, other payables (N741.9 million), and provisions and accruals(N570.2 million).
The firm’s gross profit margin slightly declined to 35.5 percent in 2024, down from 35.7 percent in 2023.
Operating expenses increased by 9.4 percent on the back of selling and distribution expenses which grew 33.4 percent and administrative expenses of 17.8 percent.
BUA Foods’ other income increased to N7.59 billion which indicates an 838 percent growth driven by sundry income of N6.47 billion.
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