Cadbury Nigeria reports 4% revenue growth for Q1 2021 with N8.9bn PAT

• Struggles with margins and operating performance

Charles Abuede

Cadbury Nigeria Plc., Nigeria’s fast moving consumer goods manufacturer has reported a 4.3 per cent year on year revenue growth in the first three months of operation in 2021 to N8.9 billion from N8.5 billion in Q1 2020, while the net profit toppled by 62.2 per cent year on year to N242 million in the same period from N639 million in the same period in 2020.

The revenue growth was primarily driven by a 26.4 per cent year on year growth in the refreshment beverages segment of the business to N5.7 billion, supported by a 3.9 per cent year on year growth in the confectionery segment to N2.9 billion, and then partially offset by a 75.2 per cent year on year decline in the intermediate cocoa products segment to N306 million.

In the unaudited interim financial statement for the first quarter ended March 2021, the company’s net finance income declined 25.6 per cent year on year, owing to interest expense on the intercompany loan and consequently resulting in the 62.2 per cent year on year profit decline to N242 million in the period under review.

However, Cadbury continues to struggle with rising input costs. As a result, the cost of sales rose more than proportionately by 18.6 per cent year on year, compressing gross margins by 10.1 percentage points to 16.7 per cent in the first quarter of 2021.

Though, the company managed to keep the costs under tight control with the selling and distribution expenses and administrative expenses waning by 22 per cent and 19.2 per cent to N893 million and N274 million, respectively. However, the company recorded the other income of a mere N6 thousand in the review period, compared to N78 million in the prior-year quarter.

Talking about the margins and operating performance, the company’s margins continue to get hit. The EBITDA of the company dropped 47.8 per cent year on year to N670 million, resulting in a 7.5 percentage points decline in the EBITDA margin to 7.5 per cent in Q1 of 2021. The operating and net margins slipped 6.7 percentage points and 4.8 percentage points to 3.6 per cent and 2.7 per cent, respectively. However, the margins are on a recovery path when compared with the last quarter of 2020. The profit before tax from all segments declined by more than 50 per cent year on year to N345 million; though there was an upward trend in domestic revenues by 16.4 per cent year on year, while exports fell by 69.0 per cent year on year.