LAGOS (Sundiata Post) – Cadbury Nigeria reported Q2 2016 results show declines across key Profit and Loss (P&L) items. While sales of N6.8m declined -8.2% Year-on-Year (y/y) to N6.8bn, the company reported losses before and after tax of -N477m and -N526m respectively. Gross margin contracted by -828basic points y/y to 24.6% to more than offset a 269.5% y/y rise in other income to lead to the bottom line losses.
Although Cadbury sources all its cocoa (a key raw material for the firm) requirements locally, the firm relies heavily on imported sugar and milk.
Sales declined by -4.6% Quarter-on-Quarter (q/q) while the loss after tax in Q2 compare with N53m recorded in prior quarter. Gross margin contracted by -884bp q/q. The half year result show that sales of N13.9bn fell by -1.6% while Profit Before Tax (PBT) and Profit after Tax (PAT) of N216m and N147m compare with losses in prior year. The results also track behind consensus sales and PBT estimates of N30bn and N1.6m respectively.
Several marketing initiatives have been recently rolled out by the company, for example, the relaunch of Bournvita, the Bournvita-Indomie collaboration promo, Shoppers delight promo and Ramadan promo. However, the effect of all these on the books are not yet visible.
New products like Clorets and Trident gum as well as the 3-in-1 hot chocolate drink are yet to effectively penetrate the market, SundiataPost investigation gathered.