Cadbury Nigeria second quarter 2017 results delivered decent top line growth of 20.6 per cent N8.2 billion but recorded a pre-tax loss of –N862 million, 80.7 per cent worse than that of the second quarter of 2016. However operating expenses were -4.5 per cent lower while the profit before tax PBT was largely impacted by a contraction in gross margin to 17.4 per c ent.
Net finance charges of –N183m as against a net finance income of N30million also contributed to the loss. Post-tax loss of -N859 million increased by 63.5 per cent year on year. Sequentially, sales grew marginally, by 1.5 per cent on quarterly basis, while both pre and post-tax losses compare with profits of N96 million and N93 million in the previous quarter of 2017 respectively.
The half year figures showed that sales were up 16.9 per cent while a pre-tax loss of –N766 million compares with N216 million profit in the first half of 2016. Again, gross margin contracted to 19.6 per c ent, offsetting a -5.0% decline in operating expenses. With a zero tax expense, the post-tax loss of –N766 million compares with N147 million profit in prior year.
According to Afrinvest “Compared with our forecasts, second quarter sales were 9.1 per cent ahead; we had forecast the company to make a modest profit before tax PBT of N80 million. On an annualised basis, the results are tracking behind consensus 2017 sales and PBT forecasts of N35.2 billion and N1.7 billion respectively. Cadbury shares have gained +20.5per cent year to date but have underperformed the NSE ASI by -16.2 per cent. We expect the stock to shed some of those gains, and a cut to consensus forecasts”.
