Cadbury Nigeria Plc has shared its financial results for the year ending December 31, 2024, and the news is a mix of challenges and improvements. The company reported a loss after tax of 10.4 billion Naira (N), which is better than the previous year’s loss of 19.1 billion Naira. This means that while they are still losing money, their losses have decreased by 45%. One of the main reasons for this improvement is that their losses before tax also dropped significantly, going from 28.2 billion Naira in 2023 down to 14.9 billion Naira in 2024, which is a 47% reduction.
In their financial report, which was shared with the Nigerian Exchange, Cadbury highlighted that their revenue – or the money they made from selling products – increased sharply by 61%, reaching 129.2 billion Naira, up from 80.4 billion Naira the previous year. This increase was largely due to strong sales in their refreshment beverages segment, which alone brought in 77.5 billion Naira.
However, despite the rise in revenue, Cadbury’s gross profit (the money left after subtracting the cost of goods sold) only grew slightly, by 1%, from 17.3 billion Naira to 17.5 billion Naira. This modest increase was due to higher costs that affected their overall profit margins. Additionally, the company’s operating profits fell by 19%, decreasing from 7.9 billion Naira to 6.4 billion Naira, mainly because of rising administrative and distribution expenses.
On a positive note, Cadbury’s overall financial health showed signs of improvement. Their total equity, which represents the company’s net worth, changed from a negative 6.5 billion Naira in 2023 to a positive 1.4 billion Naira in 2024. This improvement was supported by a 21% increase in share capital, which rose to 1.1 billion Naira, along with a significant boost in share premium and other reserves.
The company also reported a 55% improvement in basic loss per share, which went down from 1,016 kobo to 457 kobo. Although their net assets per share improved as well, they were still low at 63 kobo, compared to a negative 347 kobo the previous year.
Cadbury’s long-term assets (non-current assets) increased by 11% to 25.6 billion Naira, mainly due to investments in properties and equipment. However, their current assets (assets that are expected to be converted into cash within a year) fell slightly by 3% to 39 billion Naira, largely because of a decrease in cash reserves, which dropped from 20.5 billion Naira to 16.3 billion Naira.
On the liabilities side, the company managed to reduce its current liabilities (debts due within a year) by 10%, from 69.19 billion Naira to 62.4 billion Naira, mainly by cutting down on borrowings. Their long-term liabilities (non-current liabilities) also saw a small decline of 6% to 707.2 million Naira, reflecting a slight decrease in employee benefits and lease obligations.
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Cadbury attributed some of its financial improvements to favorable adjustments in foreign exchange rates related to loans between its companies, as well as lower finance costs during the year. However, they are still grappling with ongoing challenges, including rising operational costs, fluctuations in foreign exchange rates, and inefficiencies in their operations, which continue to impact their profitability.
In terms of their business segments, refreshment beverages remained the strongest performer, generating 77.5 billion Naira in revenue. This was followed by confectionery products, which brought in 37.4 billion Naira, and intermediate cocoa products, which contributed 14.3 billion Naira. The biscuit segment, however, struggled and recorded a small loss.
Despite these operational improvements, Cadbury is facing a tough business environment, influenced by external factors like currency devaluation and inflation, which are affecting its financial performance.
The company has been proactive in strengthening its financial position, especially after the naira (Nigeria’s currency) lost significant value, dropping from 911.68 Naira to over 1,400 Naira per US dollar in January 2024. To help address its financial challenges, Cadbury’s Board of Directors approved a strategic loan of $40 million from its parent company, Cadbury Schweppes Overseas Limited, to help pay off overdue foreign exchange loans to local banks.
Additionally, Cadbury negotiated a debt forgiveness of $20 million on this loan with its parent company. This decision was made due to the naira’s depreciation, which increased the cost of servicing foreign debts. This amount has been included in the company’s financial reports as a contribution from the parent company.
Furthermore, on February 8, 2024, shareholders approved a plan to convert a $7.72 million loan from the parent company into equity. This means that instead of repaying the loan in cash, Cadbury will issue new shares, which will help strengthen the company’s finances by increasing its shareholder funds and net assets by 7.04 billion Naira.
In summary, while Cadbury Nigeria Plc has made some progress in reducing its losses and increasing revenue, it continues to face significant challenges in a difficult economic environment. The company is taking steps to improve its financial health and position itself for future growth.
