Cadbury Nigeria grows revenue by 10%, posts N300 million profit in 2017
The audited financial results for the year ended December 31, 2017 released by Cadbury Nigeria Plc. to the Nigerian Stock Exchange (NSE) revealed that the company grew its gross earnings by 10 percent year-on-year to N33.1billion (US$91.9m) from N30 billion ($83.1m) reported in December 2016.
The company’s profit after tax was up 200 percent to N300 million in full year 2017 from a loss of N296.4 million in comparable periods in 2016.
Low interest rate, which led to a reduction in cost, coupled with increase in prices and low devaluation of the naira, were the catalysts that led to the profit realized in 2017 compared to the recorded loss in the previous year, analyst at CSL Stockbrokers Limited told BusinessDay by phone.
The Profit before tax in full year 2017, stood at N350.3 million, representing a growth of 163 percent compared to the loss before tax of N562.8 million recorded in the corresponding period of December 2016.
The company however, paid a tax of N50.3 million in 2017 and had a deferred tax payment of 266.4 million in 2016, which reduced the company’s loss before tax of N562.8 million to N296.4 million in the same period, as analyzed from the company’s financial statement.
Cadbury reported Net Finance Expense of N361m in full year 2017 compared with Net Finance Income of N170m in comparable period of 2016, mainly driven by higher Interest Expense as a result of increased borrowings coupled with a short-term loan of N1.7billion in full year 2017.
“The net earnings were in loss (NGN64.5 million) as at 9 months of 2017. Therefore, the full year profit was on the back of the NGN364 million net profits reported in the final quarter of the year (Q4). However, a short term loan of NGN1.7 billion was drawn in the last quarter of the year under review. It would seem the borrowing was deployed towards settling trade payables which reduced by NGN3.1 billion from the 9 month 2017 record,” Christian Orajekwe, Head, Research & Strategy, Cordros Capital said.
“We believe Cadbury’s revenue growth in Q4 2017 was largely volume-driven, as opposed to Q4 2016 which was majorly on prices. We were informed by distributors that there was an aggressive promotional activity in Q4, wherein customers were rewarded with discounts of as much as NGN800 for purchasing, a carton of Bournvita,” CSL Stockbrokers Limited said in a statement.
Cadbury Nigeria Plc manufactures and markets sugar confectionery, food drinks, and food products. The Company also processes cocoa and exports cocoa products via its subsidiary, Stanmark Cocoa Processing Company Limited.
The Lagos-based company has a market capitalization of N26.295 billion and traded at N14.00 per share as at the close of market 20 March 2018.
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