Cadbury Nigeria Loses 21% as Profit, Shareholders Turn Red
Cadbury Nigeria Plc shed about 21% of its market valuation as shareholders, stock traders offloaded the consumer goods company’s stock after its earnings disappointment.
The company, which is a major player in the fast moving consumer goods sector, posted N27.63 billion loss in its unaudited financial statement for 2023. Its shareholders’ funds also plunged.
Though revenue climbed by more than 45%, 2023 could be the worst year ever for Cadbury Nigeria Plc, a company that has seen both the red and green sides of the local operating conditions in the market.
The company recently announced a debt-to-equity conversion deal to settle its parent company’s US dollar borrowings. A foreign currency shortage impacts the consumer goods company’s operations and profitability negatively.
This plunged its profit performance into a ditch, resulting in large FX losses taken through its income statement. Even though price increments implemented on goods were unable to upturn the company’s fortune due to increased rivalry for consumers’ tiny wallets,.
Its share price closed at N22.95, with total shares outstanding at 1.878 billion. The company’s worth slumped to N43.1 billion as of Friday’s close. Cadbury Nigeria‘s balance sheet has been broken due to operational and strategic pressures following the devaluation of the naira in June 2023. The company has open foreign currency exposure to its parent company, Cadbury Schweppes.
Its inability to settle the foreign currency obligation forced the management to mull a plan to convert the amount to shares, increasing its parent stake to about 80% – if the debt conversion plan scaled through. The total equity of the company was more than N15 billion negative as against N13.3 billion posted in the comparable period in 2022.
Government policy development and increased rivalry amidst growing poverty in Nigeria have become a pressure cooker for most FMCG players, and Cadbury Nigeria Plc appears to be leading the pack in terms of earnings loss – for now. #Cadbury Nigeria Loses 21% as Profit, Shareholders Turn Red#
