Cadbury’s earnings per share dipped by 76.61% in Q3 2022

• Cadbury’s earnings per share dipped by 76.61% in Q3 2022
• Cadbury’s noteworthy financial facts
• The Consumer Goods sector of the Nigerian Stock Exchange

In its third quarter 2022 results, Cadbury Nigeria Plc reported a profit of N474.877 million, a 76.61% year-over-year fall. The outcome follows a year of inflation brought on by supply chain interruptions and rising energy prices, during which FMCG companies had to contend with increasing manufacturing, marketing, and distribution costs.

The unaudited data also revealed that lower margins as the rising cost of sales were to fault for the Q3 profit reduction of 22 on-year. Particularly, gross margins decreased from 29.5% in the same quarter last year to 17.1% this quarter.

Increase in sales: A thorough analysis of the information revealed that revenue increased by 27.23% to N14.663 billion in Q3 2022 from N11.525 billion in the same quarter last year.

The findings also indicated that the company’s two main product lines, refreshment beverages, and confectionery, were responsible for the revenue growth.

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Due to price increases, the majority of consumer goods companies have been able to record better sales. This, in our opinion, also applies to Cadbury. The increase in direct costs and operating expenses, however, ate up the majority of the revenue gain that was observed.

Cadbury’s noteworthy financial facts

• From N8.078 billion in 2021 to N12.142 billion in 2022, the cost of sales increased by 50.31%.
• From N3.447 billion in Q3 2021 to N2.522 billion in Q3 2022, gross profit decreased by 26.84%.
• From N1.113 billion in Q3 2021 to N1.609 billion in Q3 2022, selling and distribution costs increased by 44.56%.
• Administrative expenses increased by 439% year over year to N504.389 million from N95.168 million.
• Operating profit decreased by 81.01%, from N2.439 billion in Q3 2021 to N463.280 billion in Q3 2022.
• The overall basic earnings per share fell from N108.06 in Q3 2021 to 25.08, a 76.61% decrease.

The Consumer Goods sector of the Nigerian Stock Exchange (NGX) lists Cadbury Nigeria Plc.

The CGS is currently burdened with finance and operational costs, which are made worse every day by rising inflation, unemployment, and underemployment. As a result, fewer people are buying its products, which has an impact on revenue and earnings.

As a result, as of October 31, 2022, the CGS Index recorded a -3.65% YTD share price return, according to data obtained from NGX. The rise in sales and administrative costs have had a significant negative impact on Cadbury’s bottom line and is probably going to continue in Q4 2022. Investor sentiment would undoubtedly be impacted by this.

Cadbury engages in substantial commerce with its connected partners. For instance, around N10 billion of its N16 billion in foreign loans are intercompany loans.

Cash flow: In addition to the N17 billion it had at the beginning of the year, Cadbury produced around N1.7 billion in free cash flow from operations. Then it spent N6 billion of borrowed money to pay for imports.

Only N1.8 billion of it, though, was used to finance imports.
The purchase of property plants and equivalents cost an additional N2.8 billion.
The company’s cash position at the end of the quarter was N23.8 billion, which is much more than its equity balance of N15.5 billion.

Over the past three months, the share price of CADBURY has fluctuated significantly, moving +/- 7% of the time on average, which is greater than 75% of the NG stocks.

Investors should exercise care over this company’s recent performance because, despite its share price increasing 31.8% YTD, it lost 8% of its value over the previous four weeks.
Cadbury’s strong cash position contributes to its N21.2 billion valuation.