Seven-Up post 53% profit decline in full-year amid worsening economic environment, competition
Seven-Up Bottling Company Plc, said on Wednesday that net income for the fiscal-year ending March 31 2016 fell 53% to N3.34bn, from N7.12bn a year earlier.
The poor performance of the soft drink maker is attributable to the worsening economic environment in the country – low oil revenue, currency headwinds, inflation of 15.6% as of May 2016 compared to 9.2% a year earlier, which is the last time the company posted higher profits. Insurgency and terrorism in different parts of the country, competitive pressure, among others also weighed on the company’s profits.
The bottler of Pepsi, Mirinda, Aquafina, among others saw a 4% lift in sales for the year to N85.6bn, from N82.5bn in fiscal 2015. Cost of sales rose 17% to N60.6bn, from N52bn a year earlier, resulting in 18% drop in gross profit to N25bn, from N30.4bn in 2015.
Seven-Up profits has been negatively impacted by a host of macro-economic headwinds, including currency devaluation which is reflected in a higher cost of sales and skyrocketing net finance cost (32%) to N3.2bn, from N2.4bn.
Pre-tax profit for the beleaguered company fell 57% to N3.8bn, from N8.7bn a year earlier.