Cadbury Nigeria Plc has delivered a compelling turnaround in its H1 2025 performance, shifting from a loss position in 2024 to significant profitability, supported by sharp revenue growth, improved cost efficiency, and stronger operating leverage. While the earnings rebound is impressive, balance sheet concerns, especially around borrowings and cash erosion, suggest a need for cautious optimism.
Key Strengths
- Top-line Surge: Revenue increased by 50% YoY to ₦77.3 billion, reflecting strong demand, improved pricing strategy, and possibly volume recovery across product categories.
- Significant Margin Expansion: Gross profit jumped 128%, showing effective cost of sales control and pricing efficiency.
- Operating Profit Growth: Results from operating activities grew by 244% YoY to ₦16.3 billion – a sign of strategic cost management and operational focus.
- Return to Profitability: Profit before tax reached ₦14.5 billion, a 205% rebound from a ₦13.9 billion loss in H1 2024.
- Shareholders' Value Recovered: Net profit of ₦10.2 billion reversed the prior loss of ₦9.7 billion, resulting in basic EPS of 446 kobo vs. -426 kobo in H1 2024.
- Positive Equity Position: Shareholders' funds turned positive to ₦14.6 billion from a negative ₦2.5 billion, representing a 674% improvement in net assets per share.
Key Weaknesses
- Cash Burn: Cash and cash equivalents fell by 48% to ₦8.5 billion from ₦16.3 billion at FY 2024, indicating potential liquidity pressure.
- Debt Load Still High: Borrowings remained elevated at ₦32.2 billion, with no significant deleveraging progress in the short term.
- Working Capital Stress: Inventories surged to ₦34.5 billion from ₦13.8 billion, which could pose risks of stock obsolescence or indicate cash tied up in unsold goods.
- Current Liabilities Pressure: Total current liabilities increased to ₦72.2 billion, dwarfing current assets of ₦52.7 billion, suggesting a weak short-term liquidity profile.
Outlook
Cadbury’s turnaround is anchored in robust top-line growth and cost optimization. If the company can manage its working capital more efficiently and begin a disciplined deleveraging program, the rebound can be sustained. However, liquidity management and inventory optimization will be key watchpoints in H2 2025.
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