Cadbury records N10.4bn loss

Cadbury Nigeria Plc has reported a loss after tax of N10.4bn for the year ending December 31, 2024, representing a 45 per cent reduction compared to the N19.1bn loss recorded in 2023. The improvement was driven by a 47 per cent reduction in loss before tax, which declined to N14.9bn from N28.2bn in the prior year.

In the company’s un-audited financial statement filed on the Nigerian Exchange on Monday, despite the reduction in losses, revenue for the period surged by 61 per cent to N129.2bn, up from N80.4bn in 2023, supported by performance in the refreshment beverages segment, which accounted for N77.5bn of the total revenue.

However, gross profit grew marginally by 1 per cent to N17.5bn from N17.3bn, constrained by higher costs.

Results from operating activities fell by 19 per cent to N6.4bn from N7.9bn, reflecting administrative and distribution costs.

Meanwhile, Cadbury’s total equity improved, swinging from a negative N6.5bn in 2023 to a positive N1.4bn in 2024, buoyed by a 21 per cent rise in share capital to N1.1bn and a significant increase in share premium and other reserves.

The company recorded a 55 per cent improvement in basic loss per share, which stood at 457 kobo, compared to 1,016 kobo in 2023. Net assets per share also improved but remained at a low of 63 kobo, compared to a negative 347 kobo the previous year, marking a 118 per cent change.

Cadbury’s non-current assets rose by 11 per cent to N25.6bn, driven by investments in property, plant, and equipment, while current assets declined marginally by 3 per cent to N39bn, primarily due to a drop in cash and cash equivalents from N20.5bn to N16.3bn.

On the liabilities side, current liabilities decreased by 10 per cent to N62.4bn from N69.19bn, largely due to a reduction in borrowings. Non-current liabilities also dropped by 6 per cent to N707.2m, reflecting a slight decrease in employee benefits and lease obligations.

The company attributed its performance to foreign exchange adjustments on intercompany loans and a reduction in finance costs, which fell during the year.

However, ongoing challenges such as rising costs, FX volatility, and operational inefficiencies continue to weigh on profitability.

Cadbury’s segment analysis showed that refreshment beverages remained the top-performing business line, contributing N77.5bn to revenue, followed by confectionery at N37.4bn, while intermediate cocoa products added N14.3bn. The biscuit segment recorded a marginal loss, contributing a negligible figure to the company’s revenue.

Despite the operational improvements, Cadbury continues to face a challenging business environment, with external factors such as FX devaluation and inflation impacting its financial results.

The company has taken steps to strengthen its financial position following the devaluation of the naira, which saw the currency fall from N911.68 in December 2023 to over N1,400 per US dollar in January 2024.

Additionally, the company’s Board of Directors recently approved a strategic intercompany loan of $40 m from its parent company, Cadbury Schweppes Overseas Limited, to help settle overdue foreign exchange loans owed to local banks.

In a move to further address its financial obligations, Cadbury Nigeria negotiated a $20m debt forgiveness on the loan with CSOL. This decision was influenced by the depreciation of the Naira, which impacted the company’s foreign debt servicing costs. The $20m debt forgiveness has been incorporated into the company’s financial statements under “other reserves” as a contribution from its parent company.

“On 28 January 2024, the Board of Directors negotiated a debt forgiveness of $20 from CSOL on the $40 m received on 15 January 2024. This was necessary due to the significant devaluation of the naira from N911.68 in December to N1400+ in January 2024 against the US dollar. The debt forgiveness amount has been included as part of other reserves in the financial statements as it is a contribution from the parent company,” the company added.

In another key development, on February 8, 2024, the company’s shareholders approved a resolution to convert a $7.72m intercompany loan owed to CSOL into equity. This loan conversion will result in the allotment of 402,082,657 ordinary shares, each priced at N17.50 per share, based on the company’s share price as of December 27, 2023. This move is expected to increase Cadbury Nigeria’s shareholder funds and net assets by N7.04bn, further solidifying the company’s balance sheet and providing a solid foundation for future growth.

The PUNCH reported that Cadbury Nigeria Plc has reported a loss after tax of N9.72bn for the first half of the year, a 33 per cent improvement in the company’s bottom line when compared to the N14.54bn loss it suffered in the same period of last year.