Cadbury Nigeria posts N250.7m half-year loss

Cadbury Nigeria Plc on Thursday reported a loss before tax of N250.72m for the first half of 2015, compared with a profit of N1.79bn declared in the same period of last year.

The company’s unaudited results for the half year ended June 30, 2015, which it filed with the Nigerian Stock Exchange, showed that its revenues stood at N14.14bn, eight per cent lower that the N15.32bn earned in the same period 2014.

The food and confectionary maker saw its net assets fall to N10.05bn at the end of the period, down by 13 per cent from N11.524bn last year.

In a similar development, Wema Bank’s half-year pretax profit fell by 31 per cent to N1.17bn, from N1.70bn a year ago.

Its profit after tax declined to N999.21m during the six months to June 30, compared to N1.45bn in the corresponding period of last year, the lender said in a filing with the NSE.

Analysts at FBN Capital Limited, in their analysis of Cadbury Nigeria’s second quarter results, said it showed year-on-year declines for all key lines on the profit and loss account.

They said sales of N7.4bn fell 12 per cent y/y, while PBT and PAT declined by 92 per cent y/y and 89 per cent y/y respectively, adding that the topline decline was unsurprising given the persistent headwinds faced by consumer names over recent quarters.

The analysts said, “The insecurity in the north of the country, lower disposable incomes and the devaluations of the naira have proved difficult to overcome. 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 PBT decline of 92 per cent y/y is more than explained by the combination of a 241bp y/y contraction in gross margin and a 19 per cent y/y rise in operational expenditure. 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.”

According to them, sequentially, Cadbury’s numbers show a slight improvement from what it delivered for the first quarter of 2015. While sales were up by 10 per cent quarter-on-quarter, Cadbury recorded PBT and PAT of N53m compared with a loss before tax of -N304m in the previous quarter. A gross margin expansion of 774bps q/q more than offset a 20 per cent q/q rise in operating expenses.

The analysts said, “Cadbury’s H1 2015 sales and loss before tax of N14.1bn and –N251m respectively track behind consensus full-year 2015 estimates of N32.3bn and N1.2bn respectively. On the back of these numbers, we expect a tangible cut to analysts’ estimates. Looking ahead, we do not anticipate a recovery in consumer appetite in 2015, given the difficult macro environment.”

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Source : Punch

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