Cadbury Nigeria beats market estimates as full year revenue climb 9.3% to US$108m

NIGERIA – Cadbury Nigeria Plc, subsidiary of snack and confectionery firm Mondelez International reported a 9.3% increase in Revenue to N39.3bn (US$108m) in its unaudited 2019 Financial results from N36.0bn (US$98.9m) of 2018.

Revenue within the quarter recovered, growing 10.1% q/q to N10.4bn (US$28.5m) in Q4 2019. Reported Revenue came in higher than the company’s estimate of N38.9bn (US$106.9m) by 1.2%.

The growth was driven by broad-based recovery in Refreshment Beverages (+8.3% y/y) and Confectioneries (+20.5% y/y) while Intermediate Cocoa Products (-7.2% y/y) continued to lag.

Cost of Sales grew faster than revenue, up 11.3% y/y to N30.0bn (US$82.4m) in FY 2019 from N26.9bn (US$73.9m) in FY 2018.

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Though Gross Profit increased 3.3% y/y to N9.3bn (US$25.5m) in FY 2019 from N9.0bn (US$24.7m) in FY 2018, Gross margin weakened, down 1.4ppts y/y to 23.7% in FY 2019 from 25.1% in FY 2018 impacted by higher Cocoa & Sugar prices.

Operating Expenses recorded a sub-inflationary growth of 11.2% y/y to N6.5bn (US$17.8m) in FY 2019 from N5.8bn (US$15.9m)  in FY 2018.

The increase in Operating Expenses was driven by an 11.3% y/y increase in Selling & Distribution Expenses to N5.1bn (US$14m) in FY 2019 from N4.6bn (US$12.6m) in FY 2018 and a 10.9% increase in Administrative Expenses to N1.4bn (US$3.8m).

Against this backdrop, EBITDA declined by 11.1% y/y to N2.9bn (US$7.9m) in FY 2019 from N3.2bn (US$8.7m) in FY 2018 against a recovery in Q4 EBITDA, up 201.8% q/q to N0.9bn from a rather dismal performance in Q3.

Depreciation & Amortisation grew 3.3% y/y to N1.6bn in FY 2019. The increase in Depreciation & Amortisation, as well as decline in EBITDA, pressured Operating profit (down 24.2% y/y to N1.3bn (US$3.5m) ) & EBIT (down 19.9% y/y to N1.4bn (US$3.8m)).

However, improved financial leverage, as well as lower effective tax rate (down 14.7ppts y/y to 18.0%), provided a boost to Cadbury’s Profits as the company recorded a Net Finance Income of N185.3m (US$0.5m) in FY 2019 as against Net Finance Expense of N475.5m (US$1.3m) in FY 2018.

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Consequently, Profit before Tax jumped 26.3% y/y to N1.5bn (US$4.1m) in FY 2019 from N1.2bn recorded in FY 2018 while Net income was higher, up 53.9% y/y to N1.3bn (US$3.5m) in FY 2019 from N823.1m (US$2.2m) in FY 2018.

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