FSDH Initial Reaction: Bua Foods 1Q24 results 
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May 2, 2024/FSDH Research

Key Performance Highlights:

• In 1Q24, Bua Foods’ revenue vaulted 147.3% YoY to N356.9 billion from N144.3 billion in 1Q23, powered by massive sales growth in Sugar (up 155% YoY to N238.2 billion), Flour (up 158% YoY to N80.9 billion), and supported by Pasta (up 91% YoY to N37.1 billion). It is worth noting that total sales maintained an upward trajectory as the company’s capacity expansion drive continued to yield notable gains. Cost of sales increased 175.5% YoY to ₦241.5 billion in 1Q24, driven by higher raw materials and energy costs. However, the gross profit experienced a handsome growth, reaching N115.4 billion in 1Q24, a 103.7% YoY spurt.
   
• Other income soared to N3.7 billion in 1Q24 from N0.4 billion in 1Q23, an 812.6% jump, mainly due to a rise in scrap sales. Selling and Distribution expenses surged 55.6% YoY to N9.8 billion in 1Q24 primarily due to increased fuel prices. Administrative expenses also grew 75.3% YoY to N4.6 billion in 1Q24, mainly due to increased salaries, wages & benefits and other general expenses. Operating profit stood at N104.7 billion in 1Q24, up 117.5% YoY, from N48.2 billion in 1Q23, due to solid top-line growth driven by price adjustment and volume increase due to capacity expansion for the flour and pasta business. However, the operating margin declined 403 bps YoY to 29.3% in 1Q24 compared to 33.4% in 1Q23.
   
• The company’s finance costs increased significantly by 611.7% YoY to N15.2 billion in 1Q24 versus N2.1 billion in 1Q23. Furthermore, Bua Foods incurred FX losses of N27.3 billion during 1Q24 (1Q23: NIL). Consequently, the company reported a profit before income tax of N62.4 billion, a 35.7% YoY rise from a profit before tax of N45.9 billion in 1Q23. The company reported a net profit of N55.8 billion in 1Q24, up 37.9% YoY, compared to N40.5 billion in 1Q23. Ultimately, Bua Foods reported an earnings per share of N3.10 in 1Q24, a 37.9% YoY surge versus an earnings per share of N2.25 in 1Q23.
   
• On a segmental basis, the Sugar division contributed 67% to revenue in 1Q24, with revenue growing 155% YoY to N238.2 billion in 1Q24 (1Q23: N93.2 billion), driven primarily by price adjustments. The Flour division revenue (23% of 1Q24 revenue) increased 158% YoY to N80.9 billion in 1Q24 (1Q23: N31.3 billion), driven by the rise in volumes and prices. The Pasta division revenue (10% of 1Q24 revenue) surged 91% YoY to N37.0 billion in 1Q24 (1Q23: N19.4 billion) due to the gradual commissioning of new pasta production lines. Moreover, the new rice division generated revenue of N0.8 billion in 1Q24, contributing marginally to revenue.
   
• Sequentially, Bua Foods reported revenue of N356.9 billion, a handsome 74.9% QoQ revenue growth in 1Q24 (4Q23: N204.0 billion). In comparison, the cost of sales grew 71.3% QoQ to N115.4 billion (4Q23: N141.0 billion). The rise in Selling and Distribution expenses (up 25.9% QoQ) and administrative expenses (up 21.2% QoQ) was more than offset by the rise in other income (+802.1% QoQ to N3.7 billion in 1Q24). Although the finance costs vaulted 126.3% QoQ to N15.2 billion (4Q23: N6.7 billion), the company’s profit for the period soared to N55.8 billion in 1Q24, compared to N16.6 billion in 4Q23, a massive 236.4% rise.
   
• On 28 March 2024, the company proposed a final dividend of ₦5.50 per ordinary share, subject to appropriate withholding tax and approval. The dividend will be paid on 26 September 2024 to the shareholders of the record as of 23 August 2024.

Market Reaction: The investor reaction to Bua Foods’ 1Q24 results was muted as the stock remained unchanged at N379.90 versus a 0.55% rise for the All-Share Index (2/5).

Bua Foods Earnings Highlights 1Q24

Source: Company Financials, FSDH