" /> Cadbury closes loss gap by 64 per cent | Hallmarknews
Published On: Mon, Apr 10th, 2017

Cadbury closes loss gap by 64 per cent

 

OKEY ONYENWEAKU

There are often mixed feelings any time Cadbury Nigeria is mentioned. The name tends to evoke distrust sometimes. But the company has since put the past behind it. What matters most to the organization now is to rapidly return to profitability.

Many industry expert share this optimism, but fear that it might take a longer time than the management originally envisaged. The unfavourable operating environment induced by the general economic contraction has been fingered as the major impediment.

The confectioner, previously Nigeria’s largest company in that category, has offered investors a sour stew of profitability over the last two years.  Indeed, the company has turned loss making into an ugly art form as its books continue to swim in red paint.

Recent figures for its annual statement for 2016 have been singularly unimpressive. The giant beverage maker posted a net loss of N563 million for the year ended 31, 2016, an indication that it is closing the hole by 64 per cent. This is however, good news to those who are ready to remain patient with the company.

In the last three years, Cadbury has come under severe pressure in a slowing economy. The development has invoked fear and hopelessness on the part of shareholders. Many industry analysts observe that Cadbury with its one product line will remain uncompetitive in an economy with inflation hovering over 18 percent per annum. The company suffers from huge setbacks as a result of local currency devaluation (semi- floating of the naira by the CBN) that has made borrowing costs prohibitive and nudged up costs of goods sold by the firm.

‘’Continued difficulties with obtaining foreign exchange to buy needed raw materials, a weakened consumer purchasing power, and competition from rivals in the market are also somewhat have affected the company badly’’, others have said.

Those who took position in the company’s stock may be confused by their present misfortune since the announcement of its losses. The company did not fare any better in 2015

The Food and beverage producer, Cadbury Nigeria Plc posted a loss before tax of N563 million in the year ended December 31, 2016 compared to a pretax profit of N1.58 billion recorded a year earlier.

Similarly, the company declared a loss after tax of N296 million compared to N1.15 billion in the corresponding period of 2015.

Revenue of Cadbury Nigeria climbed 7.41 percent to N29.79 billion in 2016 end from N27.82 billion posted a year ago, the food and beverage producer said.

The company’s board of directors said there is no dividend pay out to investors of the company for the period ended December 31, 2016.

“The Directors are not recommending to shareholders the declaration of a dividend, in light of the performance of the business during the year under review,” according to Cadbury Nigeria’s audited statement for the period ended December 31, 2016.

In 2015 audited year end, the company paid to its shareholders a dividend of 65 kobo per share which amounted to N1.22 billion.Shares of the food and beverage producer at the close of the trading session on the Nigerian bourse traded at N9.46 per share as at January 3,2017 and closed last Friday April 7, 2017  as same price.

Shareholders of Cadbury said they did not expect anything less given the difficult operating environment.

‘’What could you have expected from a company that operated with lack of foreign exchange to buy raw materials’’, President National shareholders’ Association of Nigeria, Chief Timothy Adesiyan said.

From a strong confectionery company whose products dominated the market especially Bournvita, which was served on the breakfast table of every household, to a firm that appears over-whelmed by stiff competition, Cadbury seem to be fighting for survival as it is increasingly losing ground to competitors such as Nestle Nigeria with Milo, Promasidor with Cowbell, Ovaltine, among other related products which come in very small packages.

Indicative of a company which may continue to be that of struggling is evidenced in a market survey among 20 mothers within Ogba and Ikeja axis of Lagos State in which 16 said they preferred Milo to Bournvita for their children.

Industry analysts have expressed reservations on the dismal performance of the company which was a blue-chip and competed favourably with the likes of Nestle Nigeria for market share.They reckon that apart from the rocky operating environment, they can put a finger to the challenges of Cadbury.

A source, who have keenly followed the progress of Cadbury told Business Hallmark that in addition to its lean product line with Bournvita, Tom-Tom, Buttermint and the company has also been troubled by the introduction of some failed products and management issues in the last eight years.

Apart from the development limiting its competitive edge the source noted, Kraft International which acquired Cadbury in 2012 has not helped matters as its subsidiary, Mondelez, the snacks branch of the parent Company, is not inclined to help the company to reinvent itself with fresh investment and product development.

He also noted that the company’s cash-cow, Bournvita which accounts for about 80% of its revenues is facing very stiff competition in the market.

However, the spokesman of the Company Mr.BalaYesufu told Business Hallmark that it was not possible to divorce Cadbury’s weak performance from the realities of weak economy and unfavourable operating environment which even includes insurgency in the Northern Nigeria and lack of infrastructure.

MARKET SHARE

It is not very easy to determine Cadbury’s market share.  Whatever the situation, its products are still market leaders in the market, a position it has occupied since the 70’s. Bournvita, Tom Tom and Buttermint are popular names that are dominant in Africa.

The new rebranding and the direct sales strategy it recently adopted may have shot up its market share again.

Investors in the shares of Cadbury Nigeria have lost 84 per cent in two and a quarter years as its price fell from N56.61 per share on January 2014 to N9.46 on April 7, 2017.

 

 

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Recent posts

  • Time is ripe for rates cut, says Rewane as inflation slows further in Oct.

    FELIX OLOYEDE This is the appropriate time for the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to cut benchmark monetary rates after inflation rate slows down for the ninth consecutive time in October, said Mr Bismarck Rewane, Managing Director, Financial Derivatives. The National Bureau of Statistics on Tuesday released Consumer Price […]

  • ELAN National Lease Conference Focuses on Revamping Nigerian Economy

    FELIX OLOYEDE In furtherance of its objective of promoting the business of leasing in Nigeria, Equipment Leasing Association of Nigeria (ELAN) has concluded plans to organise the 15th Annual National Lease Conference with focus on revamping the Nigerian economy. The conference which is the biggest gathering of stakeholders in the leasing industry is expected to […]

  • Nigeria-centric restaurant, Labule, opens new outlet in Lagos

    Labule, Nigeria-centric restaurant, operated by an indigenous company, Roots Foods Limited, offering real Nigerian local delicacies in a unique environment that combines the setting of a modern quick service restaurant with that of an African setting of a local ‘buka’, has opened a new outlet on Admiralty Road in Lekki Phase 1, Lagos. The brand […]

  • Nigerian banks shine in Ghana

    By JOHNMARK UKOKO Nigerian banks have been credited with “revolutionizing “the banking sector in Ghana, due to the many innovations they brought to Ghana’s banking sector. The Ghana Deputy Minister of Trade and Investment Hon. Carlos Kingsley Ahenkorah said in Lagos that the innovation and transformation of the Ghana’s banking sector is credited to the […]

  • Ajimobi moves to save Oyo APC from disintegration

    By OLUSESAN LAOYE The seeming crisis in Oyo APC has now forced the Governor of the state, Abiola Ajimobi, to begin consultations with stakeholders to convinced members on why they must come together as a body to face the 2019 general elections, Although the internal crisis is yet to break open as the aggrieved party […]

  • YolaDisCo sale stalled as no potential buyers emerge

    By ADEBAYO OBAJEMU Two years after the core investors of the Yola Electricity Distribution Company, YolaDisCo, declared a force majeure owing to their inability to operate under the reign of terror unleased by Boko Haram, the Federal Government is yet to find any investor interested in operating the utility company, it has been learnt. In […]

  • Company Analysis: Much Ado about Seplat

      By TESLIM SHITA-BEY The oil and gas sector has had a bumpy since the beginning of 2017 with local oil major, Seplat, seeing its financials whipped raw by prior year liabilities despite rising revenues over the nine months (9M). The company in the last two years has moved from being distinctively bad to singularly […]

  • How to start a photography business

    By ZUBAIR DANIE While photography could be accounted for as a full blown course in any offering institution of learning for professionalism, the field equally provides a platform for individuals whose passion it is to project images as a form of livelihood. The socio-cultural aspect of Nigerians that play host of events like: wedding, naming, […]

  • BOFE to celebrate unsung heroes in local communities

    OluwasolaJesuseitan, a brand and advertising expert, is an advocate of sustainable brand communications. He is also the founder, Business Owners Forum Enterprise (BOFE), a non-profit making organization, which seeks to build the capacity of business owners in and around Akute, Ogun State. He tells FELIX OLOYEDE in this interview of his organization is promoting business […]

  • Lager wars: Who wins?

    By JOHNMARK UKOKO Nigeria has many lager beer producing companies, some have been in existence for over 50 years while others are quite new in existence in the country. Some of these companies that have over the years churned out millions, if not billions of bottles of beer to Nigerian drinkers are: Nigeria Breweries Plc, […]

  • Nestle sparkles in Q3 results

    By OKEY ONYENWEAKU As the packaged Consumer goods (PCG) sector struggles to stay ahead of falling consumer demand, companies such as Nestle Nigeria plc are bucking the trend of businesses with shrinking bottom lines. Indeed the multi-product packaged goods producer has seen earnings rise to mind boggling with its pre-tax profit rising by a stunning […]

  • 2018 Budget proposals renew old anxieties

          FELIX OLOYEDE   Mixed reactions trailed the presentation of the 2018 federal government budget by President Muhammadu Buhari to the National Assembly (NASS) last week. Public policy analysts have expressed moods from the congenially positive to the outright incredulous. The staggering N8.6 trillion expenditure plan is one of the most audacious in […]

  • Anambra 2017: Obiano battles for life

    By Obinna Ezugwu The time has finally arrived. On Saturday the people of Anambra State will head to the polls to either renew the mandate of the incumbent state governor, Chief Willie Obiano who is running for a second term in office, or elect fresh hands from among other prominent contenders, including Mr. Oseloka Obaze […]

  • (Editorial) CBN’s BVN distraction and matters arising

    Nigeria’s fiscal and monetary authorities have a frustrating way of responding to the seizure of private assets; they typically gloat with glazed eyes over private citizen’s money ready to pounce on the cash like a pack of hyenas starved witless. The recent order by the Central Bank of Nigeria that customer accounts that are not […]

  • 12 Yoga tips for beginners

    The popularity of yoga has soared in the last decades, and it seems that every other friend and acquaintance of ours is already practicing it. But don’t let it fool you into thinking it is easy: yoga is quite challenging, especially for beginners. The good news is that there are some practical tips to make […]

  • Finally, embattled IGP, Ibrahim Idris, appears before Senate

    The Inspector General of Police, Ibrahim Idris, has arrived before the Senate ad hoc committee set up to investigate the allegations and counter-allegations between him and Senator Isa Misau. The IGP was accompanied by his lawyer, Alex Iziyon (SAN) and Special Assistant to the President on National Assembly Matters (Senate), Senator Ita Enang.   Details […]


Visit us on Google+