Despite Improvement, Cadbury Records N10.24bn loss

Kayode Tokede

Despite earning a profit of over N4 billion in the third quarter ended September 30, 2023, Cadbury Nigeria Plc but is yet in the red. Luckily for investors, the profit for the quarter has reduced the company’s net loss from N14.5 billion as at half year ended June 30, 2023 to N10.24 billion at the end of the nine months of operations in 2023.

The upswing came following a rebound from foreign exchange loss in the third quarter. The company recorded a net loss of roughly N18 billion from a loss of almost N21 billion in the second quarter

The beverages and confectionery company’s third-quarter interim financial report at the end of September 2023 showed a strong improvement in fundamentals with sales revenue accelerating and costs kept moderating.

Some strength in the company’s fundamentals obscured by the foreign exchange loss in the second quarter improved further in the third quarter.

Sales revenue accelerated from 26 per cent in the second quarter to about 61 per cent in the third and the amount grew from N19 billion to N23.6 billion over the two quarters.

Production costs moderated relative to sales at an increase of 44 per cent to N17.5 billion for the third quarter, which enabled a leap of 141 per cent in gross profit to N6 billion.

There were also moderate increases in selling/distribution and administrative expenses, which powered an outstanding growth of more than seven and half times in operating profit to N3.6 billion for the third quarter.

This is a major improvement in operating profit from N1.5 billion in the second quarter. The big story that changed the company’s fortunes in the third quarter is a change of position from a huge net finance cost of N21 billion in the second quarter to a marginal net finance income of about N720 million in the third quarter.

Net finance costs had consumed more than operating income in the second quarter and created a pre-tax loss of N19.5 billion for the quarter. The position changed in the third quarter when net finance income beefed up operating profit to produce a pre-tax profit of N4.3 billion which was as good as net profit.

The company’s operations for the nine months of the year showed a turnover of over N59 billion at the end of September 2023. Sales revenue maintained an improving trend from N16.6 billion in the first quarter to over N19 billion in the second and further to N23.6 billion in the third quarter. This represents accelerated growth from 27.7 per cent at half a year to 39 percent at the end of the third quarter.

Cost of sales w as maintained at a much slower growth than sales at 25.6 per cent to less than N43 billion over the period.

The favourable combination of growing sales and slowing production costs produced outstanding growth of 94.7 per cent in gross profit to N16.3 billion at the end of the third quarter. This is a further improvement from an increase of 74.7 per cent in gross profit at half year.

The moderated cost behaviour extended to selling/distribution and administrative expenses, which powered a 191.4 percent advance in operating profit to N9.6 billion at the end of September 2023. This is accelerated growth from a 113 per cent increase in operating profit at the half year.

The huge foreign exchange loss incurred in the second quarter still left a net finance cost of roughly N20 billion, which consumed more than the operating profit and left a pre-tax loss of N10.2 billion at the end of the company’s nine months of operations.

The figure is however a reduction from the half-year loss figure but down from a pre-tax profit of N4 billion in the same period last year.

Cadbury Nigeria lost N5.45 per share at the end of the third quarter operations, dropping from N1.50 earnings per share in the same period in 2022 but improved from N7.74 loss per share at half year.

has announced a turnover of N55.21billion for the year ended 31 December 2022, representing an increase of 30.3 per cent over N42.37 billion recorded in the same period in 2021.

The Company’s recently released unaudited financial highlights for the full year 2022 (covering the period January 2022 to December 2022), also indicated that its gross profit grew from N6.48 billion in 2021, to N7.76billion in 2022, representing an increase of 19.87 per cent.

 Cadbury Nigeria’s profit for the period under review, increased by 110.22 per cent from N450 million to N946 million, while the Company’s basic earnings per share rose by 108.33 per cent from 24 kobo to 50 kobo, within the same period, showing that it maintained growth across various indices.

In a statement issued by the Company, Mrs. Oyeyimika Adeboye, its Managing Director, said Cadbury Nigeria has continued to push the boundaries to sustain its current growth trajectory in a tough business environment.

“Our recently launched candies (Cadbury Caramel, Cadbury Coffee), and Cadbury Bournvita Biscuit, all contributed to our growth profile in 2022. We will keep finetuning our strategies to manage these challenges, in line with our mission, which is focused on nourishing and delighting our consumers with the right snacks, while remaining committed to our stakeholders and doing what is right for our environment, ”Adeboye said.