Beverage giant, Cadbury Nigeria’s first quarter revenue for the period ended 31st March slowed 7.9percent year-on-year to N8.55billion, while on a quarter- to- quarter basis, revenue tanked 17.9percent from N10.4bn in Q4 2019.
The year-on-year drop in revenue was driven by lower volumes in Refreshment Beverages down 20.8percent year-on-year to N4.5bn. On the other hand, Confectionary segment was up 4.3percent year-on-year to N2.8bn and Intermediate Cocoa Products surged 36.5percent year-on-year to N1.2bn recorded upticks to cushion the decline in Refreshment Beverage sales.
Also, the makers of Bournvita and Tom-tom recorded lower cost of sales and operating expenses on the back of improved cost efficiency. Cost of sales and operating expenses fell by 9.3percent year-on-year and 13.1percent year- on- year respectively in Q1-20. The decline in costs of sales can be linked to the lower input price of cocoa which was down 6.1percent since the beginning of the year on the back of weaker global demand.
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At the same time, the company recorded a 9.1percent and 24.4percent yearon-year decline in selling & distribution and administrative expenses respectively, which supported the fall in operating expenses.
However, improved financial leverage provided a boost to Cadbury’s Profits as the company recorded a 203.1% growth in Net Finance Income to N30.3m in Q1 2020 from N10.0m in Q1 2019. Consequently, Profit before Tax improved 26.1% y/y to N912.8m in Q1 2020 from N724.0m recorded in Q1 2019 while Net Income was higher, up 26.0% y/y to N638.9m in Q1 2020 from N507.0m in Q1 2019.
Further analysis shows that Cadbury’s net operating cash flow turned positive in first quarter at N272mn from a negative at N281mn in Q119. The improvement rode on the back of a 22.8percent year-to-date increase in trade and other payables to N11.81bn from N9.62bn in FY-19, despite the 37.2percent and 17.3percent increases in inventory and trade & other receivables respectively to N8.32bn from N6.06bn and N5.32bn from N4.53bn.
Analysts believe this suggests that Cadbury largely benefited from favourable credit terms from suppliers in the quarter, but struggled to sell much of its products during period under review.
Shares of Cadbury traded at N7.45 on the floor of the Nigerian Stock exchange on Friday, with one year return down 30.62percent.
