A brief look behind the blanket of earnings season especially in the beverage and consumer goods sector shows Cadbury Nigeria Plc, against all odds, reverted to the path of profitability, thanks to costs cutting.
The company posted a profit after tax of N147.14 million in June 2016 from a loss position of N250.71 million the previous year.
A cursory look at the financial statement of the company showed the improved bottom line was bolstered by a 2.66 percent reduction in cost of sales and an 11.06 percent drop in operating expenses.
However, as it with other consumer goods firms, reduced consumer disposable income and a slow-growing economy dented top lines.
Sales were down 1.55 percent to N13.91 billion as the company’s major brand, Bournvita, still trails Nestle’s Milo in the beverage segment while TomTom, although a market leader in the confectionery space, is not a value product.
We expect the market to react somewhat positively to the company’s return to profit after years of faltering performance.