January 31, 2025/CSL Research

Cadbury Nigeria Plc. (Cadbury) reported a 60.7% y/y Revenue growth in its recent unaudited FY 2024 earnings release, with Revenue climbing to ₦129.19 billion from ₦80.38 billion in FY 2023. The topline growth is attributed to increases in product prices, better asset optimization, and the positive impact of increased global cocoa commodity pricing on its intermediate cocoa product segment. Cadbury’s refreshment beverage segment (Cadbury bournvita, and Cadbury 3-in-1 hot chocolate) sustained its position as the top contributor, accounting for about 59.95% of total Revenue. Revenue from this segment grew by 43.8% y/y to ₦77.45 billion in FY 2024 compared to ₦53.87 billion in FY 2023, when it contributed around 67.02% to overall Revenue.

The confectionery and intermediate cocoa product segments experienced significant growth, with year-on-year (y/y) revenue increases of 78.4% and 233.5%, reaching ₦37.44 billion and ₦14.30 billion, respectively. Domestic sales rose 55.4% y/y to ₦114.35 billion, up from ₦73.61 billion in FY 2023. Meanwhile, export sales more than doubled, surging 119.1% y/y to ₦14.84 billion, compared to ₦6.77 billion in FY 2023. The sharp increase in export revenue was driven by the depreciation of the domestic currency and rising global cocoa prices, which boosted the export value of cocoa butter and liquor in the intermediate cocoa product segment.

Cadbury’s asset turnover improved to 2.00x in FY 2024, up from 1.27x in FY 2023, indicating better utilisation of the company’s asset base to generate more Revenue during the period

Cadbury’s Cost of Sales surged 77.2% y/y to ₦111.70 billion in FY 2024, up from ₦63.04 billion in FY 2023. This increase was largely driven by inflationary pressures, which led to higher costs for raw materials, packaging, transportation, and spare parts purchases, including clearing expenses. As a result, the cost-to-sales ratio rose to 86.5% in FY 2024, compared to 78.4% in the previous year. Despite the revenue growth, Gross Profit saw only a marginal increase of 0.9% y/y, reaching ₦17.49 billion from ₦17.34 billion in FY 2023. Meanwhile, the Gross Profit Margin declined by 8.0 percentage points to 13.5%, down from 21.6% in the prior year.

Cadbury’s Total Operating Expenses remained largely unchanged in FY 2024, at ₦9.55 billion, compared to ₦9.54 billion in FY 2023. A 51.9% y/y increase in Administrative Expenses to ₦3.29 billion (from ₦2.17 billion in 2023) was nearly offset by a 15.2% y/y decline in Selling and Distribution Expenses, which fell to ₦6.25 billion from ₦7.37 billion in the previous year. As a result, the OPEX ratio dropped to 7.4% in FY 2024, down from 11.9% in FY 2023.

Cadbury’s EBITDA for FY 2024 stood at ₦8.34 billion, reflecting a 12.7% decline from ₦9.56 billion in 2023. Consequently, the EBITDA margin contracted by 5.4 percentage points to 6.5%, down from 11.9% in the previous year. Similarly, Operating Profit dropped 18.6% y/y to ₦6.41 billion in FY 2024, compared to ₦7.87 billion in FY 2023. This decline was partly driven by Other Expenses—including impairment provisions on idle assets, losses from lease terminations, and disposals of property, plant, and equipment—totalling ₦1.54 billion in FY 2024. This contrasts with an Other Income of ₦73 million recorded in FY 2023. Additionally, Depreciation and Amortization Expenses rose 15.2% y/y to ₦1.94 billion in FY 2024, up from ₦1.68 billion in 2023. As a result, the company’s EBIT margin declined 4.8 percentage points to 5.0%, down from 9.8% in the previous year.

Cadbury’s Finance Income for FY 2024 dropped significantly to ₦434.60 million, compared to ₦2.26 billion in FY 2023, primarily due to lower call deposit volumes during the period. On the other hand, Finance Costs declined 43.2% y/y to ₦21.74 billion in FY 2024, down from ₦38.29 billion in the previous year. This decrease was mainly driven by: 1. A sharp reduction in realized exchange differences, which fell to ₦14.58 billion in FY 2024 from ₦30.07 billion in FY 2023. 2. A 93.3% y/y decline in unrealized exchange differences, dropping from ₦6.86 billion in FY 2023 to ₦460.60 million in FY 2024.

These improvements were largely due to intercompany loan forgiveness and the conversion of intercompany loans and interest into equity, significantly reducing Cadbury’s FX-denominated exposure. However, these gains were partially offset by a 342.3% y/y surge in interest expense, which rose to ₦6.01 billion in FY 2024 from ₦1.36 billion in FY 2023, driven by the currency devaluation impact on intercompany loans. As a result, Net Finance Cost dropped 40.9% y/y to ₦21.30 billion in FY 2024, down from ₦36.03 billion in FY 2023.

As a result of these developments, Cadbury’s Loss Before Tax improved significantly, moderating by 47.1% y/y to ₦14.90 billion in FY 2024, compared to ₦28.16 billion in FY 2023. After accounting for an income tax expense of ₦4.47 billion (down from ₦9.07 billion in FY 2023), the company’s Loss After Tax stood at ₦10.43 billion, representing a 45.4% y/y reduction from ₦19.09 billion in the previous year.

We currently have a HOLD recommendation on the stock, with a target price of ₦21.70 per share. Current Price: ₦22.50 per share.

Kindly click on the below link to download the full report.

​​​CADBURY FY 2024 (Unaudited) Quick Take.pdf​​​​​​​