In a quarter where many Nigerian companies are still contending with currency volatility and weakened consumer demand, BUA Foods Plc has reported a staggering N136.3 billion in pre-tax profit for the first quarter of 2025, a performance that has doubled its year-on-year figure.

The company’s unaudited financial results for the period ended March 31 show a 118.7% increase from N62.3 billion recorded in Q1 2024, a growth rate that stands out amid the broader sluggishness in the Nigerian economy.

At the heart of this leap was a significant rise in turnover and a sharp decline in finance costs, which helped boost the company’s operating efficiency even as inflation and operating expenses remained a drag on consumer-facing businesses.

Sugar and Flour Dominate As Revenue Surges

Total revenue for the period stood at N442.06 billion, representing a 23.85% year-on-year increase compared to the N356.9 billion the company posted in the same quarter last year. The growth was powered by higher volumes and steady pricing across product categories, with fortified sugar and bakery flour emerging as the top-performing segments.

A breakdown of revenue by category shows:

• Fortified sugar: N165.8 billion
• Bakery flour: N163.2 billion
• Non-fortified sugar: N45.1 billion
• Pasta: N41.5 billion
• Other products: Unspecified remainder

The prominence of fortified sugar in revenue contribution reflects BUA’s increased investments in refining capacity and possibly stronger demand from industrial buyers, particularly in the beverage and food manufacturing sectors. Bakery flour, which continues to play a vital role in the bread-making industry, also held up well amid rising costs of wheat and energy.

Cost Pressures Persist, But Gross Margin Expands

While sales grew, the cost of sales also rose, though at a slower pace — reaching N281.1 billion, a 16.42% increase from N241.5 billion in Q1 2024. This cost moderation relative to revenue growth allowed the company’s gross profit to rise sharply by 39.41%, from N115.4 billion to N160.9 billion, effectively improving BUA’s gross margin.

However, the company wasn’t entirely insulated from inflationary pressures. Administrative expenses surged to N11.3 billion, a 149.5% increase, suggesting elevated costs around personnel, technology, or internal operations. At the same time, selling and distribution expenses climbed to N11.07 billion, a 13.3% increase from the N9.77 billion spent in the same period last year. This uptick is consistent with the firm’s broader market push to retain shelf space and expand distribution despite strained consumer wallets.

Despite these rising overheads, operating profit stood at N138.9 billion, representing a 32.67% increase from N104.7 billion in Q1 2024, a sign that the core business remains profitable even as costs rise.

Finance Costs Slashed, Boosting Bottom Line

One of the most striking aspects of BUA’s Q1 2025 performance is the 75.13% reduction in finance costs, which dropped from N15.1 billion to just N3.7 billion. The company did not provide full details in the statement, but analysts suggest this could be the result of significant debt repayments or refinancing into lower-interest instruments in the wake of the Central Bank’s monetary tightening.

This drop in finance costs played a decisive role in lifting pre-tax profit to N136.3 billion, putting BUA Foods among the highest-earning Nigerian companies for the quarter.

Stronger Balance Sheet, Retained Earnings Grow Nearly 30%

On the balance sheet, total assets increased to N1.1 trillion, representing a 4.3% uptick, while retained earnings rose to N546.2 billion, up by 29.76% year-on-year. These figures signal both an improved asset base and greater reinvestment potential, offering the company strategic flexibility in the quarters ahead.

Retained earnings, in particular, reflect the company’s growing internal capital base — a key metric for long-term sustainability and dividend-paying capacity. BUA Foods, like its peers in the consumer goods segment, has had to navigate a turbulent economic landscape where currency devaluation, higher import costs, and fuel price increases have reshaped input pricing and consumer habits.

Market Response and Share Price Outlook

Despite its strong fundamentals, the market response was measured. As of April 30, 2025, BUA Foods shares closed at N418, reflecting a modest 0.72% year-to-date gain. Analysts attribute this to broad investor caution amid Nigeria’s macroeconomic uncertainties rather than company-specific concerns.

However, BUA’s consistent quarterly growth and expanding profitability may draw fresh attention from institutional investors as the year progresses — especially if inflation continues to moderate and consumer spending stabilizes.

Going forward, BUA Foods is expected to focus on consolidating its market share across product lines while exploring operational efficiencies to cushion the effect of further cost pressures. Its ability to pass on input costs without significantly dampening demand has so far worked, but risks remain, particularly in the pasta and premium flour segments, where consumers are more price-sensitive.