Culled—Proshare
April 25, 2017/FBNQuest Research
Event: Cadbury Nigeria (Cadbury) reports Q1 2017 results
Implications: Downward revision to consensus estimates likely
Positives: Sales up 13.3% y/y
Negatives: PBT and PAT both down -86.2% y/y
Cadbury Nigeria (Cadbury) reported Q1 2017 results this afternoon showing sales growth of 13.3% y/y to N8.1bn. We believe the sales growth was supported by increased prices and slower imported competition. However, PBT declined by -86.2% y/y to a meagre N96m.
Although operating expenses were -5.6% lower y/y, the PBT was largely impacted by a -1,161bps contraction in gross margin to 21.8%, reflecting increased raw material costs. PAT of N93m decreased by -86.2% y/y, identical to the PBT decline.
Sequentially, sales fell by -6.7% q/q while both PBT and PAT fell by -65.7% q/q and -88.7% q/q respectively. Although the company will be seeking new initiatives to boost its bottomline, we reiterate that Cadbury is limited by the size of its product offering.
The sales and PBT were 5% and 66% ahead our forecasts. Compared with consensus, annualised sales are in line while PBT is tracking behind significantly. Cadbury shares have shed -9.6% ytd vs -3.9% for NSE ASI. We expect the market’s reaction to be negative.
We rate the stock Neutral. Our estimates are under review.
Cadbury Nigeria Q1 2017 results vs. FBNQuest Research estimates (N millions)
