FSDH Initial Reaction: Bua Foods FY23 results
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February 1, 2024/FSDH Research
Key Performance Highlights:
- Bua Foods reported a solid set of numbers in FY23. The company’s revenue jumped 74.1% YoY to N728.5 billion from N418.3 billion in FY22, mainly driven by significantly higher sales in Sugar (up 53.2% YoY to ₦421.5 billion), Flour (up 152.4% YoY to ₦216.9 billion), and Pasta (up 53.5% YoY to ₦87.9 billion). As the Cost of Sales grew proportionately lower than the revenues, the gross profit experienced significant growth, reaching N251.3 billion in FY23, a remarkable YoY increase of 89.3%.
- Other Income decreased from N15.2 billion in FY22 to N1.7 billion in FY23, an 88.9% fall, mainly due to a decline in sundry income. Selling and Distribution Expenses surged 97.6% YoY to N28.0 billion in FY23. On the other hand, Administrative Expenses saw a 37.6% YoY decline, reaching N11.7 billion in FY23 mainly due to lower salaries, wages & benefits and other general expenses. Operating profit amounted to N213.3 billion in FY23, reflecting an 81.5% YoY growth from N117.5 billion in FY22, benefitting from solid top-line growth driven by price adjustment and volume increase due to capacity expansion. Consequently, the operating margin improved by 119 bps YoY to 29.3% in FY23.
- However, the company’s finance costs increased significantly by 116.7% YoY to N18.9 billion in FY23 versus finance costs of N8.7 billion in FY22. Furthermore, Bua Foods incurred FX losses of N73.6 billion during FY23 (FY22: NIL). Consequently, the company reported a profit before income tax of N120.8 billion, a mere 12.7% YoY increase from a profit before tax of N107.2 billion in FY22. In addition, the company reported a net profit of N111.5 billion in FY23 compared to a net profit of N91.3 billion in FY22. Finally, Bua Foods reported an earnings per share of N6.20 in FY23, a 22.3% increase versus an earnings per share of N5.07 in FY22.
- Regarding the margins and operating performance, the company’s margins expanded in FY23, except for the net margin. The company reported depreciation and amortization of N10.0 billion in FY23, resulting in an EBITDA of N223.3 billion in FY23, meaningfully up by 77.7% from an EBITDA of N125.7 billion in FY22.
- On a segmental basis, the Sugar division contributed 57.9% to revenue in FY23, with revenue growing 53.2% YoY to N421.5 billion in FY23 (FY22: N275.2 billion) due to price adjustments in the year. The Flour division (29.8% of FY23 revenue) revenue increased 152.4% YoY to N216.9 billion in FY23 (FY22: N85.9 billion), driven by the rise in volumes and prices. The Pasta division (12.1% of FY23 revenue) revenue surged 53.5% YoY to N87.9 billion in FY23 (FY22: N57.2 billion) due to the gradual commissioning of new pasta production lines. Moreover, the new rice division generated revenue of N2.1 billion in FY23, contributing marginally to revenue (0.3% of FY23 revenue).
- Looking at the quarterly performance, Bua Foods reported revenue of N204.0 billion, a massive 59.9% YoY revenue growth in 4Q23. In comparison, the cost of sales increased 66.9% YoY to N141.0 billion. Although the company recorded selling and distribution expenses of N7.8 billion (up 12.4% YoY), administrative expenses were down marginally by 4.3% YoY to N3.8 billion. Furthermore, a 151.6% rise in finance costs to N6.7 billion and N26.3 billion FX losses resulted in the company’s profit for the period narrowing to N16.6 billion in 4Q23, compared to N27.6 billion in 4Q22.
Market Reaction: The investor reaction to Bua Foods FY23 results was muted as the stock remained at N271.80 versus a 1.90% fall for the All-Share Index (31/1).
Bua Foods Earnings Highlights FY23
Source: Company Financials, FSDH
