Cadbury Nigeria Plc

Cadbury raises profit 26% on turnover miss as analysts’ forecast pressure on demand

On every ₦100 sales made in the first quarter (Q1) of financial year 2020, Cadbury Plc direct cost was ₦73.24.

This signal an improved margin when compare to ₦74.41 on every ₦100 in the comparable period in 2019.

Compare with its Q1 2019, Cadbury turnovers dropped 8% at the end of first quarter of 2020 despite border closure.

On the back of ravaging coronavirus, analysts have predicted slower demand due to pressure on consumers’ income.

Meanwhile, analysts observed shift in sales chart following a downward slope in revenue from beverages in Q1 2020.

Cadbury is structured along three key segments namely refreshment beverages, Confectionery and intermediate cocoa products.

Notwithstanding the decline in revenues, the company delivered an improved profit performance as profit increased double digits.

Stock market performance

Cadbury share price closed the trading session on April 21 at ₦6.30, listed on the main board of the Nigerian Stock Exchange.

On shares outstanding of 1,878,202,040 Cadbury market capitalisation pitched at N11.832 billion.

In the last 7 trading days on the bourse, the stock had picked to N7 before it dropped amidst market rout.

Revenue analysis

Cadbury reported that its turnover dropped from ₦9.23 billion in first quarter 2019 to ₦8.553 billion in Q1 2020.

The breakdown of the turnover components showed that Cadbury was unable to hold the front in the domestic market.

Local sales dropped from ₦8.337 billion in Q1 2019 to ₦7.343 billion in Q1 2020. This was the case despite the border closure advantages.

Government had effectively locked out products from neighbouring countries in 2019 and analysts had predicted a positive impact on consumers’ goods.

The irony is that export sales rose to ₦1.209 billion in Q1 2020 compare to ₦945.488 million in Q1 2019.

Business segment

Refreshment beverages which includes manufacturing and sales of Bournvita and 3-in-1 Hot Chocolates is Cadbury cash cow.

Beverages accounted for 53% of the total sales made in Q1 2020. This signpost a struggling market trend as this segment accounted for more than 61% of turnover in Q1 2019.

Sales of confectionery products accounted for 33% of turnover in Q1 2020, coming from 29% of the book in Q1 2019.

Meanwhile, sales of intermediate products which had accounted for less than 10% in Q1 2019 surged to 14.4% of the revenues.


As a result, the Cadbury’s gross profit slumped to ₦2.288 billion as against ₦2.375 billion reported in Q1 2019.

Results from operating activities of the company jerked up from ₦713.65 million to ₦882.45 million.

Other income line increased despite the fact that Cadbury recorded nil revenue from sales of by-products unlike in Q1 2019.

But, other income came strong in Q1 2020 due gains recorded from disposal of properties, plants and equipment.

The company’s bottom line was supported by ₦77.563 million from other income line in Q1 2020 compare to ₦45.907 million in Q1 2019.

Following the same trajectory, the company’s profit before tax revved up 26% year on year to ₦912.765 million in 2020 as against ₦723.933 million in 2019.

Effective cost management

It was observed that cost management strengthened the company’s performance, following significant cost savings despite surge in average inflation rate.

Selling and distributions expenses declined from ₦1.258 billion in Q1 2019 to ₦1.144 billion.

Similarly, administrative overhead was brought down to ₦339.667 million compare to ₦449.067 million in the comparable period.

Again, the company made no interest payment on funds used in Q1 2020, this wasn’t the case in the comparable period in 2019.

Finance cost in Q1 2019 was ₦26.367 million which resulted to net finance cost of ₦10.281 million.

So, outside the company primary activities, there was more than ₦30 million net finance income in Q1 2020.

The consumer company reported a profit surged of 26% after taxes obligations have been taken into consideration.

The figure showed that post tax profit expanded to ₦638.936 million as against ₦506.753 million in Q1 2019.

Cadbury raises profit 26% on turnover miss as analysts’ forecast pressure on demand by Julius Alagbe