Cadbury Nigeria Plc, best known for its beloved Bournvita, reported a staggering 65% increase in pre-tax losses for the first nine months of 2024. The company’s latest financial statement reveals losses escalating from N10.24 billion in the same period of 2023 to N16.93 billion this year, despite a notable boost in revenues.
The figures tell a compelling story: Cadbury Nigeria’s revenue soared by 51%, reaching N89.52 billion, up from N59.2 billion in 2023. However, the increase in sales was overshadowed by rising costs. The company faced substantial increases in finance costs, which, coupled with a significant rise in the cost of sales, hindered profitability. The cost of sales jumped by 74% to N74.76 billion, consuming over 80% of total revenues and resulting in a gross profit decline of 9.44%.
Key highlights from the financial report include:
Revenue: N89.52 billion (+51%)
Cost of Sales: N74.76 billion (+74%)
Gross Profit: N14.76 billion (-9.44%)
Pre-Tax Loss: N16.93 billion (+65%)
Loss After Tax: N11.85 billion (+16%)
Basic Earning Per Share (EPS): (-N520)
The third quarter of 2024 was particularly telling, with revenues climbing to N38.08 billion from N23.59 billion. However, the cost of sales in this period consumed a staggering 86% of total revenues, amounting to N32.91 billion—nearly double the cost from the same quarter in 2023. This steep rise in costs translated into a pre-tax loss of N3.05 billion, compared to a profit of N4.29 billion in Q3 2023.
Despite the revenue growth, Cadbury Nigeria continues to grapple with the repercussions of previous financial difficulties. The company reported a devastating pre-tax loss of N28.2 billion for the entire fiscal year of 2023, marking a dramatic decline from the N1.3 billion profit the year prior.
In light of these challenges, the Board of Directors disclosed a significant on January 28, 2024, negotiating a $20 million debt forgiveness from CSOL on a $40 million loan. This move was deemed essential due to the sharp devaluation of the Nigerian Naira, which plummeted from N911.68 to over N1,400 against the US Dollar in just a month.
On a brighter note, revenues from Cadbury’s refreshment beverage segment were robust at N53.35 billion, while confectionary sales contributed N25.71 billion. Notably, the intermediate cocoa products segment saw remarkable growth, with revenues skyrocketing over 200% to N10.45 billion in the third quarter alone.
As Cadbury Nigeria navigates these turbulent waters, the focus will undoubtedly be on mitigating costs and enhancing operational efficiency in the hopes of turning the tide in the coming quarters. The resilience of this iconic brand will be tested, but with a loyal customer base and strategic adjustments, there remains hope for recovery.
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