BUA Foods Plc reported an 11.2% increase in profit after tax to N450.47 billion in the nine months ended September 30, 2026, despite a 19.3% decline in revenue.
This was higher than the N405.27 billion recorded in the corresponding period of 2025 when revenue stood at N1.42 trillion, compared with N1.15 trillion in 2026.
The food manufacturing company recorded an additional N45.20 billion in net profit as a substantial reduction in production costs helped offset weaker sales and higher net finance costs.
According to its unaudited financial statements, revenue declined to N1.15 trillion from N1.42 trillion, representing a reduction of N274.90 billion.
However, cost of sales fell by 34.1% to N592.94 billion from N900.09 billion, a reduction of N307.15 billion that exceeded the decline in revenue.
Consequently, gross profit increased by 6.2% to N552.90 billion from N520.65 billion, despite the contraction in turnover.
The improvement lifted BUA Foods’ gross profit margin to approximately 48.3% from 36.6%, indicating that the company retained a significantly larger proportion of revenue after accounting for production costs.
The divergence between falling revenue and rising gross profit was the most significant development in the company’s nine-month performance.
While the financial statements establish the reduction in cost of sales, the figures provided do not identify how much of the improvement resulted from lower input prices, changes in product mix, production efficiency or other factors.
Operating expenses also declined during the period.
Administrative expenses fell by 27.9% to N21.95 billion from N30.43 billion, while selling and distribution expenses declined by 15.4% to N45.04 billion from N53.22 billion.
The combined reduction in these expenses helped operating profit increase by 12.5% to N492.50 billion from N437.58 billion.
Other income rose sharply to N6.59 billion from N587.40 million, providing additional support to operating earnings.
However, finance income declined to N985.68 million from N7.05 billion, while finance costs increased by 8.8% to N12.96 billion from N11.91 billion.
As a result, net finance costs increased to N11.98 billion from N4.86 billion, partially offsetting the improvement in operating profitability.
Nevertheless, profit before tax increased by 11.1% to N480.52 billion from N432.58 billion.
Income tax expenses also rose to N30.05 billion from N27.31 billion, leaving profit after tax at N450.47 billion.
Basic earnings per share increased to N25.03 from N22.52 in the corresponding period of 2025, reflecting the improvement in earnings attributable to shareholders.
Beyond profitability, BUA Foods’ balance sheet showed contrasting movements.
Total assets declined by 1.8% to N1.36 trillion as of September 30, 2026, from N1.39 trillion at the end of December 2025.
Inventories decreased by 28.7% to N58.00 billion from N81.38 billion, while trade and other receivables fell to N37.87 billion from N101.89 billion.
However, cash and short-term deposits increased by 135.9% to N132.99 billion from N56.36 billion, strengthening the company’s reported cash position.
Amounts due from related companies declined to N726.82 billion from N753.75 billion but remained substantial, accounting for approximately 53.3% of total assets.
This concentration is important because a significant proportion of the company’s assets remains tied to balances receivable from related parties rather than cash or inventories.
Meanwhile, total liabilities increased by 4.2% to N702.47 billion from N674.35 billion, while shareholders’ equity declined by 7.5% to N659.91 billion from N713.44 billion.
Retained earnings fell to N651.86 billion from N705.39 billion despite the N450.47 billion profit recorded during the nine months.
The reduction warrants examination of dividends and other equity movements, as the statement of financial position alone does not explain the decline.
BUA Foods’ nine-month results therefore present an unusual combination of falling revenue, improving profitability and a declining equity balance.
For investors, the critical question is whether the substantial improvement in gross margins can be sustained in subsequent reporting periods, particularly if revenue remains under pressure.
The company’s ability to maintain lower production costs, recover sales growth and manage its significant related-party receivables will be important in assessing the durability of its earnings performance.
