Weak Demand Hits BUA Foods’ H1 Revenue, but Profit Rises to N292bn

The food manufacturer overcame weaker consumer demand and lower selling prices by cutting production and operating costs, while strong pasta sales provided a rare growth spot.

BUA Foods Plc reported a 12 per cent increase in profit after tax to ₦292.27 billion in the first half of 2026, defying a sharp fall in revenue as lower input costs, exchange-rate stability and tighter spending strengthened its margins.

The company’s unaudited results for the six months ended June 30 showed that revenue declined by 16 per cent to ₦765.12 billion, from ₦912.51 billion in the corresponding period of 2025. The contraction reflected softer consumer demand and lower selling prices across several major product categories.

Despite the ₦147.4 billion drop in sales, BUA Foods reduced its cost of sales by 30 per cent — from ₦573.18 billion to ₦401.89 billion. Management attributed the improvement principally to lower raw-material costs and greater exchange-rate stability.

That cost reduction lifted gross profit by seven per cent to ₦363.23 billion. More significantly, the company’s gross-profit margin expanded to 47.5 per cent from 37.2 per cent, an increase of 10.3 percentage points.

Operating profit rose by 13 per cent to ₦320.52 billion, while the operating-profit margin jumped to 42 per cent from 31 per cent. Profit before tax increased by 14 per cent to ₦314.88 billion.

BUA Foods also cut selling and distribution expenses by 15 per cent to ₦30.44 billion following lower logistics costs. Administrative expenses dropped by 25 per cent to ₦14.50 billion, helping reduce total operating expenses by 18 per cent to ₦44.93 billion.

Net finance costs fell by 38 per cent to ₦5.64 billion as interest expenses on loans declined. Earnings per share consequently increased by 12 per cent to ₦16.24, compared with ₦14.45 a year earlier.

Sugar and flour sales weaken

The revenue decline was broad but most pronounced in BUA Foods’ flour business, where sales fell by 27 per cent to ₦276.2 billion amid softer demand. Flour’s contribution to group revenue declined to 36 per cent from 41 per cent.

Sugar revenue dropped by 18 per cent to ₦327 billion following what the company described as strategic and competitive pricing measures. The division remained the group’s largest business, contributing 43 per cent of total revenue.

Rice sales also declined by 20 per cent to ₦31.3 billion because of competitive pricing initiatives.

Pasta emerged as the company’s strongest growth engine. Revenue from the division surged by 35 per cent to ₦130.6 billion, supported by higher demand and sales volumes. Pasta’s contribution to group revenue climbed to 17 per cent from 11 per cent, while its gross-profit margin improved to 43 per cent from 37 per cent.

Assets rise above ₦1.6tn

BUA Foods’ total assets grew by 20 per cent to ₦1.67 trillion, driven mainly by amounts due from related companies and production-capacity expansion.

Total equity rose by 41 per cent to ₦1.01 trillion, supported by retained earnings of ₦997.7 billion. Liabilities, meanwhile, declined marginally by 1.3 per cent to ₦665.54 billion.

However, the company’s return on equity fell to 29 per cent from 36.5 per cent, while return on assets declined to 17.5 per cent from 18.7 per cent.

Managing Director Ayodele Abioye said the results demonstrated resilience in the face of softer consumer demand and lower prices.

“Despite these headwinds, BUA Foods delivered a resilient performance, supported by operational excellence, disciplined cost management, and the continued strength of our diversified product portfolio,” he said.

He added that the company would focus during the second half of the year on restoring sales volumes, deepening market penetration and optimising pricing while preserving the efficiencies that supported earnings.