Cadbury Nigeria Plc, said on Thursday it recorded a net loss of N842m in the first nine months of 2016 ending 30 September. In the same period in 2015, the company made N29m in profit.
The maker of Bournvita has come under pressure on multiple fronts in a slowing economy that has seen inflation spike to 17.9% as of September, made worse by the June 20 naira devaluation which has made borrowing costs more expensive, reflected in higher cost of goods sold. And as with most FMCG companies in the country, obtaining foreign exchange to buy needed raw materials continues to pose a challenge. Compounding the problem for the firm is a weakened consumer purchasing power and competition from rivals in the market. The losses reached N1bn in the third quarter (July – September).
While cost of sales for the beleaguered company climbed 15% to N16.8bn in the 9-months to September 30, from N14.7bn in 2015, the jump accelerated in the third quarter (July – Sept), skyrocketing 50% to N7bn, from N4.7bn in the previous year. As a result, Gross Profit for the first 9-months declined 30% to N4.5bn, as against N6.4bn recorded in the previous year. The last 3-months saw an acceleration in the decline as it plummeted 81% to N426m, down from N2.3bn in 2015.
The company managed to trim administrative expenses as it fell 38% to N1.2bn, from N1.9bn in the 9-months to September, and dropped even further by 75% in the last three months to N152m, down from N602m.
Cadbury said that revenue grew 1% to N21.3bn in the 9-months to September, from N21bn in the same period in 2015. The rate of growth picked-up in the third quarter, climbing 6.8% to N7.4bn, from N6.9bn a year earlier.
According to the company, its products are grouped into three principal categories – Refreshment Beverages, which includes Cadbury Bournvita and Cadbury 3-in-1 Hot Chocolate and contributed 60% of revenue in 2015; Tom Tom confectionery is another category, which contributed 32% of sales; while Intermediate cocoa products, consisting of Cocoa powder, Cocoa cake and cocoa Butter contributed 8% of sales.