Cadbury Nigeria Plc has reported 62 per cent drop in profit before tax in its unaudited first quarter results for period ended March 31, 2021 to N345.1million as against N912.77million reported in first quarter for period ended March 31, 2020.
The results on the Nigerian Exchange Limited (NGX) on Monday noted that profit for the period gained 62 per cent to N241.58million in Q1 2021 from N638.94million in Q1 2020.
The multinational company reported 4 per cent increase in revenue to N8.92billion in Q1 2021 from N8.55billion reported in Q1 2020.
Our correspondent gathered from the Q1 2021 results that the company reported 3 per cent drop in total equity to N13.79billion as at March 31, 2021 from N14.21billion reported in full year ended December 31, 2020.
Cadbury Nigeria had reported 73 per cent decline in profit before tax to N408.1million in its audited result and accounts for full year ended December 31, 2020 from N1.54billion reported in 2019.
The full year results showed that the multinational company profit after tax also dropped by 13 per cent to N931.8million in 2020 from N1.07billion reported in 2019.
Our correspondent gathered the company reported 10 per cent decline in revenue to N35.41billion in 2020 from N39.33billion reported in 2019.
In line with the information contained in the report, the 10per cent decrease in the revenue of Cadbury Nigeria in 2020 was occasioned by the decrease in domestic and export sales of the company, this decline went on to impact the profits of the company in 2020.
Total assets moved from N33.2billion in full year ended December 31, 2020 to N36.9billion as at March 31, 2021.
The company reported 36.2 per cent decline in export sales to N3.1billion in 2020 from N4.88billion reported in 2019 while domestic sales also dropped by 6.2 per cent to N32.29billion in 2020 from N34.44billion reported in 2019.
It is important to understand that Cadbury’s profitability thrives on high volume and high revenue (-9.97 per cent).
However, the decrease in revenue without a more than proportionate decrease in Cost of Sales (-4.39per cent) pressured the company’s prospects of posting an impressive profit last year, as gross profit declined by 30.73 per cent.
Consequently, the impact of the COVID-19 on the company’s sales pressured revenue in 2020, and this impacted profits significantly.
With cost of sales dropping from N31billion in 2019 to N29.51billion in 2020, the company reported 29 per cent decline in gross profit to N5.9billion in 2020 from N8.33billion reported in 2019.
Amid decline in profit, the management of Cadbury Nigeria recommended total dividend of N338.1million (2019: N912.3 million) that is N0.18 kobo (2019: N0.49 kobo) per ordinary share of 50 kobo each.
Cadbury Nigeria’s non-core business income increased to N108million in 2020 from N87.13million in 2019.
This is logical as FMCG profit margins are usually rather slim, hence Cadbury, like every other player operating in the FMCG sector mostly employs a strategy focused on driving top-line sales (revenue) and by extension increasing market share.