Cadbury’s Profit Margin Hits 8-year High Despite Hurdles

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Cadbury’s Profit Margin Hits 8-year High Despite Hurdles
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Amid slowing demand in the face of a difficult business environment, Cadbury Nigeria has recorded its highest first-quarter profit margin in eight years.

In Africa’s biggest economy, consumer goods firms operate in an environment that makes it difficult to make money from core operations, and delivering the desired returns in form of bumper dividends and share appreciation is a herculean task for captains of industry.

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Despite challenges, Cadbury increased its profit margin to 21.08 percent in the first quarter of 2023 from -4.48 percent in the first quarter of 2016.

Data gleaned from the Nigerian Exchange Group reveals Cadbury Nigeria’s profit spiked by 133 percent to N3.5 billion in the first quarter of 2023 from N1.5 billion in the same period of 2022.

Cadbury Nigeria’s revenue increased to N16.6 billion in the first quarter of 2023, 29.7 percent increase from N12.8 billion in the similar period of 2022.

The firm’s cost of sales accounted for 61.45 percent of the total revenue in Q1 2023 which is the least in seven years. This represents a decline from 78.13 percent in the first quarter of 2022.

Cadbury Nigeria’s cost of sales stood at N10.2 billion in the first quarter of 2023, 2 percent increase from N10 billion in the first quarter of 2022.

More analysis

Cadbury

Cadbury Nigeria’s profit recorded 133 percent which is a recovery from N1.87 billion loss in the fourth quarter(Q4) of 2022 which can be attributable to Cadbury’s cost of sales claiming 104.81 percent of its Q4 2022 total revenue.

The firm’s input cost grew slower than revenue to account for N10.2 billion in Q1 2023 from N9.6 billion in Q1 2022 which indicates 6 percent marginal increase.

Cadbury Nigeria’s revenue grew 29.7 percent to N16.6 billion from N12.8 billion driven largely by the beverages business segment, which contributed 70.3 percent of the revenue and grew by 28.2 percent to N11.64 billion in Q1 2023 from N9.08 billion in Q1 2022.

The firm’s confectioneries segment grew 14.8 percent to N3.9 billion in Q1 2023 from N3.42 billion in Q1 2022, while contributing 23.7 percent to total revenue.

Similarly, revenue from intermediate cocoa products jumped by 35 percent to N393 million in Q1’2023 from N291 million in Q1’2022 with a marginal contribution of 2.4 percent to the revenue mix.

Analysts at CSL Research said they believe that the recent increase in prices was still a major driver of revenue growth.

Cadbury Nigeria’s gross profit increased by 98 percent to N6.4 billion in Q1 2023 from N3.23 bn in Q1 2022, while gross margin increased by 11280 basis points to 40 percent in Q1 2023 from 27.2 percent in Q1 2022.

Profit before tax stood at N4.93 billion from N2.2 billion thereby leading to PBT margin of 29.8 percent from 17.2 percent which indicates 126o basis points increase during the period.

The firm’s administrative expenses declined by 16.6 percent to N260 million in Q1 2023 from N311.7 million in Q1 2022 while selling and distribution expenses were up by 58.4 percent to N1.6 billion in Q1 2023 from N1.01 billion in Q1 2022.

Operating expenses margin grew by 80 percent basis points to 10.3 percent in the first quarter of 2023 from 9.5 percent in the first quarter of 2022.

Earnings before interest, taxes, depreciation and amortization(EBITDA) spiked by 117.9 percent to N4.92 billion in the first quarter of 2023 from N2.26 billion in the first quarter of 2022.

Similarly, EBITDA Margin grew by 1200 basis points to 29.7 percent in the first quarter of 2023 from 17.7 percent in the same period of 2022.

The firm’s net finance income increased to N380 million, 36 percent increase from N278.9 million in the period reviewed.

Cadbury Nigeria’s cash and cash equivalents increased by 24.8 percent to N34.26 billion in the first quarter of 2023 from N27.45 billion in the first quarter of 2022.

The firm’s total borrowings for the period increased by 17.3 percent to N27.98 billion in the first quarter of 2023 from N23.86 billion in a similar period of 2022.

Cash and cash equivalents at the end of the period amounted to N34.26 billion in the first quarter of 2023, 64 percent increase from N20.89 billion in the first quarter of 2022.

Basic earnings per share stood at N184 kobo in the first quarter of 2023 from N82 kobo in the first quarter of 2022.

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