January 29, 2024/CSL Research

In its FY 2023 unaudited earnings, Cadbury Nigeria Plc. (Cadbury) reported a 45.6% y/y growth in Revenue to N80.38bn from N55.21bn in FY 2022. Its cost of sales (ex-depreciation) grew slower than Revenue, up 30.2% y/y to N60.46bn for FY 2023 from N46.45bn in 2022. Consequently, FY 2023 Gross Profit increased to N19.92bn, up from N8.76bn in 2022. Gross profit margin advanced 8.9ppts to 24.8% from 15.9% in 2022.

The company’s Operating Expense (without depreciation) was up 18.82% y/y to N8.51bn from N7.16bn in FY 2022. While Selling and Distribution Expense (without depreciation) advanced by 12.9% y/y to N6.99bn in FY 2022 from N6.19bn in the prior year, Administrative Expense (without depreciation) was up 56.6% y/y to N1.52bn in 2023 from N971m in 2022. However, the company recorded no writebacks in 2023 compared to a N4.21m writeback of impairment on receivables reported for FY 2022.

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FY 2023 EBITDA grew to N11.41bn from N1.60bn in 2022. The company’s depreciation and amortization increased to N3.08bn in FY 2023 from N1.49bn in FY 2022, bringing its Operating profit to N8.32bn in the period from N1.49bn in FY 2022. Other Income declined to N73m (vs N82m in FY 2022). Overall, EBIT grew significantly to N8.40bn for FY 2023 from N194m in 2022.

Cadbury recorded Finance Income of N2.26bn in FY 2023, up from N1.61bn in FY 2022 whilst its Finance Cost came in at a whooping N38.29bn in FY 2023 from N504m in FY 2022. Consequently, its Net Finance Expense settled at N36.03bn in FY 2023 from a gain of N1.10bn in FY 2022. The exponential rise in its Finance Expense resulted in a Loss Before and After Tax of N27.63bn for FY 2023 (Zero tax) compared with a Profit Before Tax of N1.30bn in FY 2022 and a Net Profit of N583m in FY 2023.

We have a price target of N21.19/share for Cadbury with a Sell recommendation. Current price of N22.95/s.

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