Cadbury Nigeria Plc last Friday reported a loss in its operations for the nine months ended September 30, 2016, thereby dimming hopes of shareholders receiving a dividend at the end of the financial ending December 31, 2016.The unaudited results showed a revenue of N21.326 billion in 2016, up marginally from N21.073 billion in the corresponding period of 2015. Cost of sale rose from N14.671 billion to N16.848 billion, making the company to close the period with gross profit of N4.476 billion, as against N6.402 billion in 2015.However, Cadbury recorded a negative bottom-line, showing a loss after tax of N842 million, compared with a profit after tax (PAT) of N28.55 million in the corresponding period of 2016.Analysing the results, analysts at FBN Quest said the third quarter (Q3) sales stood at N7.4 billion, indicating a growth of 6.8 per cent due to base effect.“The company recorded pre and post-tax losses of N1.1 billion and N989 million respectively. The losses were driven by a gross margin contraction of 2,709 basis points (bps) to 5.8 per cent, offsetting a 22.3 per cent decline in operating expenditure (opex)to N1.5 billion,” they said.The analysts added that although opex declined by 14.5 per cent for the nine months to N5.5 billion, a 939bps contraction in gross margin to 21.0 per cent had a more significant impact on profits.“The results show that Cadbury, like most consumer goods firms, is yet to overcome the negative impact of macro headwinds. The continued devaluation of the naira, which moved further down to c. N305/US$ as of end-September (having fallen to N280/US$ as of end-June from N199/US$), weighed on gross margins. Production inputs such as sugar and milk are mostly imported,” they added.According to them, compared with their estimates, sales were 15.5 per cent ahead.“However, we had forecast PBT and PAT of N309 million and N247 million respectively vs. the pre-tax and after-tax losses reported by the company. While the annualised sales figure is in line with consensus full year sales estimate of N27.5 billion, the PBT (loss) tracks behind consensus’ N960 million,” they said.Cadbury paid a dividend of 65 kobo per share for 2015 despite a fall of 46 per cent in profit to N1.153 billion, from N2.137 billion.
