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April 29, 2022/FSDH Report

Key Performance Highlights:

• Cadbury Nigeria reported a solid 43.4% YoY revenue growth in 1Q22 to N12.8 billion, while the net profit ballooned 538.1% YoY to N1.5 billion in 1Q22. Cadbury’s revenue growth beat Unilever’s 24.5% YoY revenue growth this quarter. The company’s revenue growth was driven by Refreshment Beverages (+59.9% YoY) and Confectionary (+16.4% YoY), partially offset by Intermediate Cocoa products (-5.0% YoY). Moreover, the company successfully contained rising costs, with the cost of sales rising a relatively lower 28.6% YoY, expanding gross margins by a massive 858 bps YoY to 25.3% in 1Q22.
   
• The selling & distribution expenses grew 13.7% YoY to N1.0 billion, and the Administrative expenses climbed 13.6% YoY to N312 million in 1Q22. The company’s other income stood at N17 million in 1Q22, primarily due to an N11 million gain on property, plant, and equipment disposal. The company’s net finance income jumped to N279 million (1Q21:N23 million), primarily due to a spurt in the interest income from bank deposits to N376 million in 1Q22 from N39 million in 1Q21. Cadbury reported a profit before tax of N2.2 billion in 1Q22, a massive 538.1 YoY jump. Resulting from a stable effective tax rate, the company’s net profit stood at N1.5 billion in 1Q22 compared to N242 million in 1Q21. Cadbury Nigeria recorded earnings per share of N0.82 in 1Q22 compared to N0.13 in the prior year period.
   
• Talking about the margins and operating performance, the company’s margins expanded substantially. The operating profit and net profit margins expanded by 1142 bps YoY and 935 bps YoY to 15.0% and 12.1%, respectively, in 1Q22. Moreover, the company recorded profits in all its segments, led by Refreshment Beverages (N1.6 billion), followed by Confectionary (N589 million), and Intermediate Cocoa products (N50 million) in 1Q22. The domestic revenues rocketed 44.2% YoY to N12.3 billion, followed by exports soaring 23.9% YoY to N465 million in 1Q22.
   
• Looking at the sequential performance, Cadbury Nigeria reported a steady 3.8% QoQ revenue growth in 1Q22. In comparison, the cost of sales declined 16.5% QoQ to N9.6 billion in 1Q22, resulting in a massive 266.5% jump in the gross profit to N3.2 billion. The company also recorded a significant drop in operating expenses, resulting in a profit after tax of N1.5 billion in 1Q22, compared to a loss of N683 million in 4Q21.

Market Reaction: Investor reaction to 1Q22 results was overwhelmingly positive as the Cadbury Nigeria stock closed 10.00% up at N0.85, versus a 0.55% gain for the All-Share Index (28/4).

Cadbury Nigeria Earnings Highlights 1Q22

Source: Company Financials, FSDH