Cadbury Nigeria plc (Cadbury) a company listed on the consumer goods sector of the Nigerian Stock Exchange (NSE) last week released its second-quarter (Q2) result for the period to June 30, 2015.
The result at the Nigerian Stock Exchange show Cadbury Nigeria plc reported 8 percent decline in revenue. Its Q2 revenue dipped to N14.137bn from a high of N15.321bn in H1’14.
“The topline decline is unsurprising given the persistent headwinds faced by consumer names over recent quarters. The insecurity in the north of the country, lower disposable incomes and the devaluations of the naira have proved difficult to overcome”, research analysts at Lagos-based FBN Capital Limited said in their first reaction to Cadbury Q2’15 results.
According to the analysts, “while there are now active steps to restore security in the northern regions of the country (mainly the north east), we do not expect a quick turnaround in earnings for the industry. This situation is even more difficult for Cadbury, given its limited product portfolio”.
The company reported a Loss Before Tax (LAT) of N250.72million in H1’15, from a Profit Before Tax (PBT) of N1.792billion in H1’14, a decline of 113.99%.
Cadbury reported Loss After Tax (LAT) of N250.72million in H1’15 from N1.263billion Profit After Tax in H1’14, a huge decline of 119.84% when compared with corresponding period of 2014.
The company reported 1% increase in cost of sales figure to N10.013billion, from N9.907billion. It implies that Cadbury management spent N10.013billion in the second-quarter in producing goods it sold in the Q2’15. This amount includes the cost of the materials used in creating the good along with the direct labour costs used to produce the good.
“To a large extent, the devaluations of the naira have weighed on Cadbury’s performance during the quarter. Besides cocoa, which Cadbury actively sources locally, other primary raw materials such as sugar and milk are mainly imported. Sequentially, Cadbury’s numbers show a slight improvement from what it delivered for Q1 2015,” the analysts said.
Currently, the manufacturer and marketer of cocoa-based beverages and product has a market capitalisation of N65.83billion and shares outstanding of 1,878,202,040 units. The share price Cadbury Nigeria plc opened this week at N35.05.
The result shows Cadbury basic loss per share at 13kobo from earnings per share of 67kobo in the prior period, a huge decline of 119%.
On the back of these numbers, the analysts expect a tangible cut to their estimates on Cadbury. Looking ahead, FBN Capital analysts do not anticipate a recovery in consumer appetite in 2015, given the difficult macro environment. Cadbury shares have declined -12.4% ytd, underperforming both the NSE All Share Index (ASI) at minus 11.3% and consumer sector in negative 5.8%. “We expect a negative reaction by the market to these results.”
Iheanyi Nwachukwu
