At least two manufacturers in the Nigerian economy, Lafarge Africa Plc and Bua Foods Plc have highlighted the cash crunch and the 2023 general elections as challenges that they faced in their operations in the first quarter of the year
This was disclosed in their first quarter financial reports which were filed with the Nigerian Exchange Limited.
Speaking on the Q1 results, the Managing Director of Bua Foods, Ayodele Abioye, said, “BUA Foods Plc continue to deliver strong performance across key financial metrics despite the business climate headwinds characterised in Q1 by the economic impact of the general elections, high food inflation and shortage of cash in circulation following the currency redesign policy.
“We continue to leverage our unique strategic business model to minimise the impact. We are committed to remain the most profitable business in our sector while creating long term values for our stakeholders as we expand our frontiers.”
Highlighting the challenges faced in the first quarter, Chief Executive Officer of Lafarge Africa, Khaled El Dokani, said, “Q1 2023 was a challenging first quarter due to the economic impact of the general elections and shortage of cash in circulation following the currency redesign policy. These constrained our financial performance. However, we remain focused on delivering sustainable value to all stakeholders as market recovers post-election and through the rest of the year.
“Lafarge Africa remains committed to accelerating green growth in line with our sustainability ambitions and targets.”
Despite the headwinds, in the first quarter, Bua Foods’ revenue rose by 26 per cent to N144.3bn. Its profit after tax appreciated by 77.1 per cent to N40.5bn for the first quarter 2023.
All other performance indicators were sustained at double digits growth even as earnings per share increased by 77 per cent relative to same quarter in 2022.
It also recorded an increase in the cost of sales (+41.9 per cent) to N87.6bn in Q1, 2023 (Q1 2022: N61.7bn) driven by an increase in raw materials cost and energy cost. The high input cost environment and further devaluation of the naira against the US dollar weighed heavily on prices for raw materials. This resulted in higher cost of production.
At cement manufacturer, Lafarge Africa, net sales went up by 1.3 per cent to N91.82bn from the previous financial period of N90.60bn. The firm said that profit before tax went up by 4.7 per cent as the general elections impacted growth in the period, resulting in N22.48bn against N21.46bn in the first quarter of 2022.
However, the profit after tax dropped by 14.9 per cent to N14.93bn from N17.55bn in the same period in 2022.