July 25, 2024/CSL Research

In its H1 2024 earnings result, Cadbury Nigeria Plc. (Cadbury) reported a 44.5% y/y and 31.0% q/q increase in Revenue to N51.44bn from N35.61bn and N21.18bn in H1 2023 and Q1 2024 respectively. Most of this growth was driven by domestic sales, which increased to N45.74bn in H1 2024 from N34.89bn in H1 2023. Export sales also showed significant improvement, rising to N5.70bn in H1 2024 from N714m in the prior year. However, the Cost of Sales (adjusted for depreciation) surged by 70.0% y/y to N41.18bn in H1 2024, up from N24.23bn in H1 2023. As a result, Cadbury’s gross profit decreased by 9.8% y/y, coming in at N10.26bn in H1 2024, down from N11.38bn in H1 2023.​

Adjusted for depreciation, Operating Expense (OPEX) grew 19.4% y/y to N4.34bn, up from N3.63bn in H1 2023. This resulted in an OPEX margin of 8.4% in H1 2024, down from 10.2% in the previous year. Selling and Distribution Expenses saw a substantial rise of 90.6% y/y, reaching N1.14bn in H1 2024, compared to N598m in H1 2023. Administrative Expenses also increased to N3.20 bn in H1 2024, up from N3.03bn in H1 2023. As a result, Cadbury’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) decreased by 23.5% y/y, decreasing to N5.93bn in H1 2024 from N7.74bn in H1 2023. The EBITDA margin also declined by 10.2 percentage points, dropping to 11.5% in H1 2024 from 21.8% in H1 2023.

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Cadbury’s Depreciation and Amortisation dropped by 41.6% y/y to N983m in H1 2024 from N1.68bn in H1 2023. Its Operating Profit came in at N4.94bn (-18.5% y/y) in H1 2024 compared with N6.07bn in H1 2023. EBIT was down to N4.73bn (-22.1% y/y) in H1 2024 from N6.07bn in H1 2023.

Cadbury Nigeria Plc.’s Net Finance Expense remained high at N18.61bn in H1 2024, though a reduction from N20.61bn in H1 2023 driven by reported FX loss of N16.56bn. The high FX loss continued to undermine the company’s profitability. Consequently, Cadbury reported a Loss Before Tax of N13.88bn in H1 2024, slightly improved from a loss of N14.54bn in H1 2023. An Income Tax credit of N4.16bn helped to reduce the Net Loss to N9.72bn in H1 2024, compared to a Net Loss of N14.54bn in the same period of the previous year.

We have a Buy recommendation on Cadbury with a price target of N29.71/share. Current price of N18.50/s.

​CSL_Cadbury_Quick Take H1 2024.pdf​​​​​