Background
Cadbury Nigeria was incorporated in 1965 and is the market leader in sugar confectionery, gum and food beverages in Nigeria with strong market shares across all three categories.
The company operates through two segments, Confectionery and Food Drinks, and Intermediate Cocoa Products. Cadbury Nigeria is a member company of Cadbury Schweppes Plc, a major player in the global confectionery and beverages markets with 40,000 employees and business operations in 200 countries.
Cadbury’s initial objective in the 1950s to source cocoa and prospect for a market in Nigeria led to the establishment of a manufacturing facility in Ikeja, north of Lagos, in 1965.
Cadbury Nigeria also owns a cocoa processing business, the Stanmark Cocoa Processing Company.
The company has 1.88 billion shares outstanding, with shareholder funds standing at N24 billion as at the end of December 31 2013.
Financial performance for December 31 2013
Despite the lack of accessibility to key markets in the North and coupled with increased financing cost which have resulted in slow growth of many fast moving consumer goods companies, Cadbury Nigeria Plc, posted an impressive financial performance as shown in its audited financial statement for the year ended December 31 2013.
The company grew gross revenue by 7 percent year on year (y/y) to N35.76 billion from N33.55 billion recorded in the corresponding period of 2012.
Gross profits were up 32.5 percent y/y to N13.10 billion in FY13 compared to N11 billion as at FY12 hence gross profit margin rose to 36.6 percent as against 32.78 percent in 2012.
The above performance was as a result of reduction in inputs cost as cost of sales in the review period declined to 63.36 percent in FY13 from 67.21 percent FY12 which explains why cost of sales remained flat at 0 percent to N22.66 billion (current period).
Cadbury reported profit before tax (PBT) of N7.42 billion for the twelve-month period to December 2013, an increase of 38 percent Year-on-Year (YoY), from N5.36 billion as at year end (FY) 2012.
Overall efficiency has improved as net profit margin in the review period increased to 20.94 percent from 16.40 percent in FY12. It means that the company has been able to achieve satisfactory returns on shareholders fund.
The stellar good performance of Cadbury stem from its ability to minimize cost as operating expenses increased slightly by 3 percent to N7.43 billion from N7.25 billion FY12, while finance charges were down by 52 percent y/y to N1.77 billion in the current period of Q4’13.
Profit after tax (PAT) in the year ended December 31 2013 soared by 80 percent to N6.0 billion from N3.35 billion in the erstwhile period (FY) 2012.
Return on equity (ROE) climbed to 43.17 percent in FY13 as against 40.16 percent as at FY12, while Return on assets (ROA) climbed to 25 percent from 16.75 percent in FY12.
Earnings per share EPS surged by 79 percent y/y to 192k in Q4’13 compared to 107k recorded in the corresponding period of 2012.
Current ratio which measures the ability of a firm to meet its short term obligation as at when due as at year end December 2013 stood at 1.82x compared to 1.64x which is still within the industrial average of 2.1x.
Sales turnover which measures how assets are used to generate sales for the period Q4’13 was 1.49x lower than 1.64x recorded in the corresponding period of Q’12 2012.
Debtors have been paying promptly as the company in the period recorded lower collection period of 65 days which explains one of the reasons behind improved profitability and stable liquidity position.
The company’s total assets were up 7.45 percent year on year (YOY) to N43.17 billion in FY13 from N40.16 billion recorded for the same period in the prior year.
Net assets increased by 20 percent year on year to N24 billion for the twelve months through December 31 2013 from 20.04 billion in the corresponding period of 2012.
Share performed and Outlook.
The share price of Cadbury Nigeria Plc has increased by 70 percent in the past year to close at N85.40 on March 17th 2014 on the floor of the Nigeria Stock Exchange (NSE).
The market capitalization of the company on the same day stood at N160.4 billion.
It recorded a price to book ratio of 7.17 and a price to sales ratio of 4.47, while current P/E ratio and estimated P/E ratio were 30.81 and 28.23 respectively.
BALA AUGIE
