BUA Foods Plc put up a new strength in earnings for the finishing line in the 4th quarter that more than compensated for the weakness in the second quarter and powered an increase of about 30 percent in net profit to over N90 billion at the end of the 2022 financial year.
The company’s unaudited earnings report for the full year ended December 2022 shows that the final quarter made the strongest contribution to revenue and profit across quarters at N127.6 billion and N27.6 billion respectively.
The 4th quarter numbers represent 30.5 percent each of the full-year sales revenue and after-tax profit of N417.8 billion and N90.4 billion respectively.
The second half presented a much better earnings picture for the food manufacturing company than the first with N249 billion or 60 percent of turnover and over N51 billion or 57 percent of profit realised during the period.
The company’s earnings story of slowing sales and pressured margins in the first half improved to accelerating sales with cost savings stretching out margins in the second half. However, the full-year growth of 25 percent in turnover is a sharp showdown from the outstanding growth of roughly 73 percent in sales revenue in 2021.
The 4th quarter led revenue growth through the year at an increase of almost 38 percent quarter-on-quarter to N127.6 billion. Cost of sales moderated in the quarter at an increase of 25 percent to over N84 billion – which powered a record growth of 72 percent in gross profit to N43 billion for the quarter.
The gain in gross profit in the quarter was largely claimed by cost increases, including administrative expenses that jumped more than two and half times to almost N4 billion.
Selling and distribution costs followed in the same pattern, jumping more than two times quarter-on-quarter to roughly N7 billion.
The cost increases were reinforced by a 72 percent drop in other income to N388 million during the same period, despite which operating profit still grew by more than one-half to N32.7 billion for the quarter.
Finance expenses led all the cost increases in the final quarter, rising close to three times over the corresponding figure in 2021 to N2.7 billion. Despite the incursion in operating profit, the company still grew pre-tax profit by 44 percent to N30 billion in the final quarter.
The company’s full-year earnings numbers show that sales revenue improved by 25.4 percent to N417.8 billion at the end of December 2022. Moderated by the final quarter slowdown, the cost of sales grew slightly below sales revenue at 22.6 percent to N282 billion.
Cost saving from input expenses enabled an increase of 31.6 percent in gross profit to N135.5 billion at the end of the year. The strength came mostly from the 72 percent leap in gross profit in the final quarter.
Management’s cost-saving effort only succeeded in respect of administrative costs which went down by 22.5 percent to a little over N11 billion at the end of the year.
However, selling and distribution expenses rose by 68.6 percent to stand at over N17 billion in the full year.
The cost saving from administrative expenses provided the strength to raise operating profit by 36 percent to N108.7 billion at the end of the year.