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BUA Foods Plc Reports Impressive Financial Year 2022 Results

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BUA Cement Chairman - Investors King

BUA Foods Plc, one of Nigeria’s leading food and beverage companies, has announced its financial results for the year 2022, showing an impressive performance despite challenges faced by the industry.

According to the company’s financial statement obtained by Investors King, BUA Foods recorded a profit after tax of N91.3 billion in 2022, which represents a 31 percent increase from N69.8 billion achieved in the previous year.

The firm’s net profit margin also improved to 22 percent from 21 percent in the reviewed period.

The revenue from contracts with customers grew by 26 percent to N418.3 billion, driven largely by sales of non-fortified sugar, fortified sugar, and bakery flour. Other line items that contributed to the overall revenue are sales of pasta, sales of bran, and sales of molasses.

The cost of sales increased by 24 percent to N285.6 billion, which is largely attributable to cost of raw materials consumed and factory production overhead. The high input cost environment and further devaluation of the naira against the US dollar weighed heavily on prices for raw materials, resulting in a higher cost of production.

However, BUA Foods’ gross profit climbed 29 percent to N132.8 billion in 2022 from N103 billion in 2021, leading to a 32 percent gross margin, up from 31 percent in the previous year. The firm’s operating profit rose to N117.5 billion, up 47 percent from N79.9 billion, which resulted in its operating profit margin of 28 percent in 2022, a 400 basis-point increase from 24 percent in 2021.

The company’s return on assets grew to 69 percent in 2022 from 56 percent in 2021, while BUA Foods’ return on equity stood at 181 percent, up from 166 percent in the period reviewed. Its quick ratio stood at 81 percent in 2022, compared to 72 percent in 2021, while its current ratio rose to 91 percent from 79 percent in the comparable period.

Despite rising interest rates during the period reviewed, BUA Foods’ debt-to-equity ratio dropped to 80 percent from 109 percent, while its debt ratio was at 35 percent, down from 41 percent.

In terms of cash flow, the movement in the firm’s cash and cash equivalents revealed net cash generated from operating activities amounted to N124.5 billion, a 43 percent increase from N871.7 million in 2021. Net cash used in investing activities recorded a negative cash flow of N15.4 billion, down from N104.4 billion negative cash flow in the comparable period, while net cash generated from financing activities recorded a negative of N108.8 billion as against a positive cash flow of N114.8 billion.

Overall, BUA Foods Plc’s financial year 2022 results demonstrate its resilience and ability to navigate challenges in the food and beverage industry while still achieving impressive growth.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Manufacturers Cut Spending on Alternative Energy Sources as Electricity Supply Improves

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Manufacturing Sector - Investors King

Nigerian manufacturers reduced their spending on alternative energy sources by 21.25% to N60.4 billion in the first half of 2023, according to the Manufacturers Association of Nigeria (MAN).

This decline is attributed to the increased availability of electricity from the national grid, which improved to 11.3 hours per day, up from 10.2 hours in the same period of 2022.

The report also indicated a slight increase in daily power outages to 4.7 times from 4.4 times in H1 2022.

These improvements in grid electricity availability have positively impacted the manufacturing sector’s energy expenditure, leading to a significant drop from N76.7 billion spent in the second half of 2022.

However, the initial high expenditure on alternative energy sources was driven by skyrocketing diesel prices.

The cost of diesel had surged due to foreign exchange challenges and the implementation of a 7.5% Value Added Tax on Automotive Gas Oil (diesel).

Diesel prices in many states had risen to between N900 and N950 per liter, which threatened the production capacity of numerous manufacturing entities.

The Nigerian Textile Manufacturers Association expressed concerns about the potential closure of textile factories and job losses due to rising energy costs. Textile manufacturers, in particular, found it challenging to afford diesel at such prices.

The Chief Executive Officer of Coleman Technical Industries Limited also highlighted the increased production costs associated with higher diesel prices.

While the improvement in electricity supply is a positive development for manufacturers, the industry remains vigilant about energy costs and their impact on production.

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Dangote Group Subsidiaries Contribute N474 Billion in Taxes to Federal Government Over Three Years

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Dangote Sugar - Investors King

In a significant testament to its commitment to corporate citizenship and financial responsibility, three subsidiaries of the Dangote Group have revealed that they paid a substantial total of N474 billion in taxes to the Federal Government over the past three years.

The disclosure was made by Hashem Ahmed, an official representing the multibillion-dollar conglomerate, during the opening ceremony of the 18th Abuja International Trade Fair, which focused on the theme ‘Sustainable financing and taxation as drivers of the new economy.’

The Dangote Group, led by its President Aliko Dangote, stands as not only the largest private-sector employer but also the country’s leading taxpayer. The remarkable N474 billion contribution was primarily made by Dangote Sugar, Dangote Cement, and Dangote Salt.

Also, the group has a longstanding history of extensive financial support, empowerment initiatives, corporate social responsibility programs, sponsorships, and philanthropic endeavors, amounting to several billions of naira.

Hashem Ahmed also expressed the group’s satisfaction with the Federal Government’s commitment to tax reform policies aimed at broadening the tax base and providing essential funding for infrastructure development in the country.

The Minister of Industry, Trade, and Investment, Doris Uzoka-Anite, who spoke at the event, announced the government’s comprehensive plan to support small businesses and startups amid Nigeria’s economic challenges.

The plan includes a N75 billion investment by March 2024 to bolster the manufacturing sector, grants for microbusinesses in every local government, and a N75 billion fund to support up to 100,000 startups and MSMEs at favorable interest rates repayable over 36 months.

The government has also initiated partnerships with tech giants like Microsoft and the African Development Bank, signaling a bright future for Nigeria’s economic growth and innovation.

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Merger and Acquisition

Dangote Industries Set to Revolutionize Agriculture Industry with Mega Merger, Creating Dangote Foods Plc

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Dangote Industries Limited has unveiled plans for a merger that will give rise to a formidable entity known as Dangote Foods Plc.

This colossal conglomerate is poised to transform the agriculture industry and enhance food security across the nation.

The merger will combine three subsidiaries of Dangote Industries Limited, including Dangote Sugar Refinery, Dangote Salt, and Dangote Rice, resulting in a diversely profitable mega-company.

The fusion, scheduled for completion by the end of 2023 pending regulatory approvals, promises to yield significant benefits for all stakeholders, notably shareholders.

Dangote Sugar Refinery’s Group Managing Director and CEO, Mr. Ravindra Singhvi, highlighted the merger’s strategic importance, stating its potential to create substantial shareholder value.

The amalgamation will not only generate cost-saving synergies but also expand product offerings and revenue streams.

Dangote Foods Plc is set to become a powerhouse in the market, boasting a wide array of products, including sugar, salt, tomato, and rice, among others. This merger will facilitate broader distribution capabilities and increased operational efficiency through synergy.

The journey towards this monumental merger began when Dangote Sugar Refinery notified the Nigerian Exchange Limited of its intention to merge with NASCON Allied Industries Plc and Dangote Rice Limited, both subsidiaries of Dangote Industries Limited.

This move marks a pivotal moment in the corporate history of Nigeria, with Dangote Industries Limited reaffirming its commitment to driving growth, innovation, and food security for the nation.

As regulatory approvals progress, Dangote Foods Plc is poised to emerge as a prominent player in Nigeria’s agricultural landscape, ultimately paving the way for a brighter and more sustainable future for the country.

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