NIGERIA | FMCG | CADBURY

Quick take: FX loss erodes profitability in Q1 2024

Cadbury Nigeria Plc. (Cadbury) reported a 43.1% y/y and 11.9% q/q increase in Revenue to N23.70bn in Q1 2024 from N16.56bn and N21.18bn in Q1 2023 and Q4 2023 respectively. Most of its turnover came from domestic sales which grew to N21.95bn in Q1 2024 from N16.08bn in Q1 2023 while its export sales also increased to N1.75bn in the period from N489m in Q1 2023. Its Cost of Sales (adjusted for depreciation) jumped 84.8% y/y to N18.37bn in Q1 2024 from N9.94bn in Q1 2023. This led to a decline in Gross Profit to N5.33bn in Q1 2024 down by 19.6% y/y from N6.62bn in Q1 2023.

In Q1 2024, the company's Operating Expense (adjusted for depreciation) increased by 21.6% y/y to N2.07bn from N1.70bn in Q1 2023 driven by growth in both Selling and Distribution Expense and Administrative Expense. While Selling and Distribution Expense (adjusted for depreciation) grew by 6.2% y/y to N1.39bn in Q1 2024 from N1.48bn in the same period of the prior year, the Administrative Expense (adjusted for depreciation) rose to N680m in Q1 2024 from N221m in Q1 2023. This brought Cadbury's EBITDA to N3.26bn (-33.8% y/y) in Q1 2024 from N4.92bn in Q1 2023 while its EBITDA margin lost 16.0ppts to close the quarter at 13.8% from 29.7% in Q1 2023.

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Cadbury's Depreciation and Amortisation rose to N488m (+29.0% y/y) in Q1 2024 from N379m in Q1 2023 bringing Its Operating Profit to N2.77bn (-39.0% y/y) in Q1 2024 from N4.54bn in Q1 2023. The company reported Loss on Disposal of Property, Plant and Equipment of N11.79m and gains from insurance claims of N305m in the period. This brought its EBIT to N2.76bn (-39.4% y/y) in Q1 2024 from N4.55bn in Q1 2023.

The company's Net Finance Expense of N13.22bn in Q1 2024, largely driven by N13.39bn in FX loss, completely eroded Cadbury's chance of profitability in the period. This led to a Loss Before Tax of N10.5bn in Q1 2024 compared with a Pre-tax profit of N4.93bn in Q1 2023. An Income Tax credit of N3.32bn was able to bring the company's Net Loss to N7.32bn in Q1 2024 compared with a Net Profit of N3.45bn in Q1 2023.

We have a Buy recommendation on Cadbury with a price target of N28.52/share. Current price of N17.00/s.

"‹CSL_Cadbury_Quick-Take-Q1-2024.pdf "‹"‹"‹"‹

"‹"‹"‹"‹"‹"‹"‹"‹"‹Kind Regards.

Analyst: Sunmisola Ikoli-Oluwo"‹"‹

Email: CSLResearch@fcmb.com"‹

Address: 44 MARINA, LAGOS ISLAND, "‹

Website: www.cslstockbrokers.com