FSDH Initial Reaction: Cadbury Nigeria FY21 results 
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February 1, 2022/FSDH Research

Key Performance Highlights:

• Cadbury Nigeria reported a mixed set of numbers in FY21 as its revenue jumped 19.7% YoY to N42.4 billion while the net profit tumbled 10.9% YoY to N830 million in FY21. The revenue growth was driven by Refreshment Beverages (+29.7% YoY) and Confectionary (+14.4% YoY), offset by Intermediate Cocoa products (-36.3% YoY). As the cost of Sales declined only 21.5% YoY, Cadbury’s gross margins compressed 130 bps YoY to 15.4% in FY21.
   
• Moreover, the company kept the costs under tight control in FY21. The selling & distribution expenses grew 10.2% YoY, while the Administrative expenses declined by 21.7% in FY21. The company’s other income fell 77.7% YoY to N24.0 million in FY21. Note that there was no Impairment during the current financial year. The company’s net finance income jumped 4.8x. Cadbury reported a profit before tax of N1.2 billion in FY21, a 2.9x jump YoY. The company paid the tax at the rate of 30.0% this year (versus a tax credit a year before), which resulted in the company’s profit declining 10.9% YoY to N830 million in FY21. Cadbury Nigeria recorded earnings per share of N0.44 in FY21 compared to N0.50 in the prior year.
   
• The company’s margins were hit hard in FY21. The EBITDA of the company increased 3.4% YoY; however, the EBITDA margin contracted 73 bps YOY to 4.6% in FY21. The gross and net margin declined by 130 bps and 67 bps YoY, respectively. However, all three segments witnessed a significant rise in the profit before tax. Geography-wise, there was a substantial decline in Export revenues (-32.4% YoY), while domestic revenues surged 24.7% YoY.
   
• Looking at the quarterly performance, Cadbury Nigeria reported a 28.2% YoY revenue growth in 4Q21 to N12.3 billion, while the net loss inched 0.2% YoY to N683 million in 4Q21. Cadbury’s revenue growth lagged behind Unilever’s 42.2% YoY revenue growth this quarter. However, its strong topline performance couldn’t trickle down to the bottom line as it couldn’t control the rising costs. Consequently, Cadbury reported a loss before interest tax, and depreciation of N915 million, compared to N611 million in 4Q20. The company’s earnings per share remained almost at the same level of N0.36 per share in 4Q21.

Market Reaction: The investor reaction to the relatively weak FY21 results was subdued as the stock plunged 9.5% to N8.60 versus a marginal 1.3% fall for the All-Share Index on the next day (26/1).

Cadbury Nigeria Earnings Highlights FY21

Source: Company Financials, FSDH