FSDH Initial Reaction: Cadbury Nigeria 1Q24 results 
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May 3, 2024/FSDH Research

Key Performance Highlights:

• Cadbury Nigeria reported a mixed set of numbers in 1Q24. The company recorded revenue of N23.7 billion in 1Q24 from N16.6 billion in 1Q23, a 43.1% YoY spurt. The revenue growth was driven by Refreshment Beverages (+21.4% YoY to N14.1 billion), Confectionary (+99.2% YoY to N7.8 billion), and Intermediate Cocoa products (+344.6% YoY to N1.7 billion). Geography-wise, domestic revenues maintained the upward trend with a 36.5% YoY revenue growth to N21.9 billion, and exports witnessed a solid growth of 258.4% YoY to N1.8 billion in 1Q24. However, as the Cost of Sales grew proportionately greater than the revenues (+83.3% YoY to N18.7 billion in 1Q24), the gross profit declined to N5.0 billion in 1Q24, a 21.5% YoY fall.
   
• In 1Q24, the company’ reported other operating loss of N11 million due to loss on disposal of property, plant and equipment compared to other income of N10 million in 1Q23. Selling and Distribution Expenses marginally decreased by 4.6% YoY to N1.5 billion in 1Q24. Administrative expenses vaulted 183.6% YoY, reaching N737 million in 1Q24. Ultimately, the company’s operating profit dropped 39.4% YoY to N2.8 billion in 1Q24, compared to N4.6 billion in 1Q23. Moreover, Cadbury Nigeria recorded a net finance loss of N13.2 billion in 1Q24 due to FX losses, compared to a net finance income of N380 million in 1Q23. Despite being helped to some extent by income tax credits of N3.1 billion in 1Q24 (vs. tax expenses of N1.5 billion in 1Q23), the company reported a net loss of N7.3 billion in 1Q24 compared to a net profit of N3.5 billion in 1Q23. Furthermore, Cadbury Nigeria reported a loss per share of N3.21 in 1Q24 versus an earnings per share of N1.84 in 1Q23.
   
• Looking at the margins and operating performance, the company’s margins across the board fell significantly in 1Q24, and the company’s EBITDA contracted 34.1% YoY to N3.2 billion in 1Q24 (1Q23: N4.9 billion). Segment-wise, Refreshment Beverages reported a loss before tax of N6.7 billion (vs. N3.5 billion profit before tax in 1Q23), the Confectionary segment reported a loss before tax of N3.7 billion (vs. N1.2 billion profit before tax in 1Q23), the biscuit segment reported a profit before tax of N1 million (1Q23: N180 million).
   
• Looking at the sequential performance, Cadbury Nigeria reported revenue of N23.7 billion, an 11.9% QoQ revenue growth in 1Q24 (4Q23: N21.2 billion). Furthermore, the cost of sales decreased by 5.0% QoQ to N18.7 billion (4Q23: N19.7 billion). Although the administrative expenses grew 23.1% QoQ to N737 million (4Q23: N599 million), the selling and distribution expenses declined 30.7% QoQ to N1.5 billion (4Q23: N2.1 billion). Moreover, the company recorded tax credits of N3.1 billion in 1Q24 (4Q23: NIL). As a result, the company’s net loss for 1Q24 was curtailed to N7.3 billion, compared to N17.4 billion in 4Q23.

Market Reaction: The market reaction to Cadbury Nigeria’s 1Q24 results was muted as the stock remained unchanged at N17.00 versus a 0.55% gain for the All-Share Index (2/5). Moreover, the stock closed flat at N17.00 versus a 0.83% gain for the All-Share Index 3/5.

Cadbury Nigeria Earnings Highlights 1Q24

Source: Company Financials, FSDH