Sources have provided reasons why Cadbury’s profit before tax in the first quarter of 2014, fell 31 percent. Reliable sources and analysts told Real Sector Watch that lower consumer demand in the first quarter and insecurity in various parts of the country were two key reasons for this.
“First quarter has been very challenging for many firms in the Fast-Moving Consumer Goods (FMCG) market. As for Cadbury, economic lull resulting in slow consumer off-take has affected it as well as security challenges in the North,’’ said a reliable source, who wished to remain anonymous.
Cadbury, a leading multinational confectionary company, had its revenue fall by 17 percent to N6.92 billion, from N8.36 billion reported in the prior period of 2013. Its pre-tax fell 31 percent to N1.15 billion, from N1.68 billion recorded in the corresponding period of 2013. Profit after tax fell by 21 percent to N805.80 million, from N1.141 billion recorded in the prior period. This was also the same as the total comprehensive income for the period.
Apart from the lull in consumer demand, which analysts say affected most players in the FMCG market, it was gathered that insecurity situation in the North also had a telling impact on the maker of Bournvita, Tom Tom and Tang. Though Boko Haram insurgency is mostly felt in the North-East, sectarian, ethnic and minor clashes have been at their peak in other parts of the North within the first quarter.
It was also gathered that sales representatives of Cadbury for the North were stationed in Abuja. Customers from Borno, Yobe and other Northern parts of the country take the risks of coming over to the country’s capital to do their transactions.
Cadbury is also considering unveiling a milk product, but this will have to be determined by Mondelez International, its parent company, a source revealed. The source said the company might consider importing milk first, to test the market capacity before finally commencing local production if it gains acceptance from the parent company.
