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Cadbury’s revenue, profit beat estimates in 2019

Cadbury published its UNAUDITED FY 2019 results announcing a 9.3% y/y increase in Revenue to N39.3bn in FY 2019 from N36.0bn in FY 2018.

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Cadbury Nigeria Plc appoints new managing director

Cadbury has published its UNAUDITED FY 2019 results announcing a 9.3% y/y increase in Revenue to N39.3bn in FY 2019 from N36.0bn in FY 2018.

Furthermore, Revenue within the quarter recovered, growing 10.1% q/q to N10.4bn in Q4 2019. Reported Revenue came in higher than our estimate of N38.9bn by 1.2%.

Revenue growth continues to be driven by broad-based recovery in Refreshment Beverages (+8.3% y/y) and Confectioneries (+20.5% y/y) while Intermediate Cocoa Products (-7.2% y/y) continues to lag.

Cadbury Nigeria Un-audited Interim Financial Information, OK Foods Limited has sued Cadbury UK Limited

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Cost of Sales (ex-depreciation) grew faster than revenue, up 11.3% y/y to N30.0bn in FY 2019 from N26.9bn in FY 2018. Though Gross Profit increased 3.3% y/y to N9.3bn in FY 2019 from N9.0bn in FY 2018, Gross margin weakened, down 1.4ppts y/y to 23.7% in FY 2019 from 25.1% in FY 2018. We believe pressure from higher Cocoa & Sugar prices impacted margins during the year.

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Operating Expenses (adjusted for depreciation) recorded a sub-inflationary growth of 11.2% y/y to N6.5bn in FY 2019 from N5.8bn in FY 2018. The increase in Operating Expenses was driven by an 11.3% y/y increase in Selling & Distribution Expenses (adjusted for depreciation) to N5.1bn in FY 2019 from N4.6bn in FY 2018 and a 10.9% increase in Administrative Expenses (adjusted for depreciation) to N1.4bn.

Against this backdrop, EBITDA declined by 11.1% y/y to N2.9bn in FY 2019 from N3.2bn in FY 2018. We note the recovery in Q4 EBITDA, up 201.8% q/q to N0.9bn from a rather dismal performance in Q3.

[READ MORE: Fidelity Bank reports a 28.5% increase in profit for FY 2019)

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Depreciation & Amortisation grew 3.3% y/y to N1.6bn in FY 2019. The increase in Depreciation & Amortisation, as well as decline in EBITDA, pressured Operating profit (down 24.2% y/y to N1.3bn) & EBIT (down 19.9% y/y to N1.4bn). However, improved financial leverage, as well as lower effective tax rate (down 14.7ppts y/y to 18.0%), provided a boost to Cadbury’s Profits as the company recorded a Net Finance Income of N185.3m in FY 2019 as against Net Finance Expense of N475.5m in FY 2018.

Consequently, Profit before Tax jumped 26.3% y/y to N1.5bn in FY 2019 from N1.2bn recorded in FY 2018 while Net income was higher, up 53.9% y/y to N1.3bn in FY 2019 from N823.1m in FY 2018. We note reported Net income beat our projection of N952.4m on the back of lower effective tax rate. Earnings per Share printed at N0.67/s (CSL Estimate – N0.51/s) in FY 2019 compared to N0.44/s in FY 2018

We have a HOLD recommendation on the stock with a target price of N12.77/s.

Cadbury Plc: Revenue & Profit beat estimates

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CSL STOCKBROKERS LIMITED CSL Stockbrokers,

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Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

PO Box 9117,

Lagos State,

NIGERIA.

 

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Columnists

PIB; Will the jinx be broken this time around?

Many stakeholders hold strongly that new investments in the oil sector is dependent on the passage of the PIB.

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PIB; Will the jinx be broken this time around?, President Buhari may sign 2020 Budget tomorrow, President Buhari approves N37 billion for National Assembly renovation, President Buhari appoints Sarki Auwalu to head DPR , FG may stop interstate and inter-town travels, COVID-19: President salutes Elumelu, Dangote, Atiku, Banks, others for support, Naira export earnings, Covid-19: FG to set up N500 billion intervention fund, sovereign wealth, FG issues guidelines on implementation of gradual easing of lockdown nationwide, Electricity: FG approves one year waiver of import on meters

News reports say President Mohammed Buhari has finally sent the Petroleum Industry Bill to the Senate for consideration and passage. The Bill according to media sources among other things still proposes the restructuring of the Nigerian National Petroleum Corporation and the Petroleum Products Pricing Regulatory Agency. The NNPC will be replaced by a limited liability company, which shall be called Nigerian Petroleum Company (NPC Limited). The bill also proposes the establishment of an agency known as the Nigerian Upstream Regulatory Commission which will be responsible for the technical and commercial regulation of upstream petroleum operations alone.

READ: Nigeria to handover TAM of refineries to Indian companies

The Petroleum Industry Bill (PIB) was first introduced to the National Assembly in December 2008. A presidential committee set up in 2007 to look into the oil and gas sector came up with this bill, which aims to increase transparency at the NNPC and to increase Nigeria’s share of oil revenue. Drafts of the bill, however, became very contentious due to objections from the international oil companies (IOCs) and the Nigerian National Petroleum
Corporation (NNPC). Consequently, the bill was never passed into law. Towards the end of 2015, the PIB was amended to speed up its passage and was broken into different bills, one of which was the PIGB, to address the governance framework of the oil industry. The Senate President noted that the plan was to expedite the aspects of the old law that were not controversial while the controversial areas could be placed on hold. The two houses passed
the PIGB in 2018 but the President did not sign the bill till it ran out of time.

READ: FG projects $2 billion annual revenue from Escravos Gas project

In all the versions of the Bill, key themes that have constantly featured include; The ownership and management of petroleum resources, functions and powers of the Minister of Petroleum, the establishment of the Nigerian Petroleum Regulatory Commission (NPRC) to act as a regulator for the industry and the restructuring of the NNPC. According to the Minister of State for Petroleum Resources Timipre Sylva, this version that has been sent to the National Assembly is a harmonisation of all the existing versions from 2000 to date with necessary adjustments to address the concerns raised by the industry players. One of such concern was the recommendation of a single regulator for the entire industry as was stated in the PIGB which has been addressed in the current version of the bill.

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READ: FEC approves $40 oil benchmark for 2021 budget

With more than a decade of deliberations and revisions, it will be a great relief to all stakeholders if this version of the Bill is finally passed into law. Currently, Nigeria is said to have one of the least competitive Deepwater fiscal terms in Africa and is increasingly losing significant amounts of potential investments to other African countries. Many stakeholders hold strongly that new investments in the oil sector is dependent on the passage of the PIB which would take a more holistic approach in addressing issues around the fiscal terms especially following the passage of the Deep Offshore and Inland Basin Production Sharing Contracts (amendment) Bill, 2019 (PSC Amendment Bill).


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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Local refining; A panacea for Nigeria’s reliance on imported refined products

The start up of refineries will attract , enhance employment opportunities and conserve the foreign exchange earnings of the country.

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Analysis: NNPC and its refining losses 

News reports earlier this week say the Vice President, Prof. Yemi Osinbajo, speaking at a virtual meeting noted that the problems associated with Nigeria’s refineries will persist if the Federal Government continues to own and run them. According to him, the government should have no business running refineries as they should be in the hands of the private sector. He further noted that the government’s focus currently is to assist the private sector develop modular refineries. He listed a few private refineries coming on stream which include a 100,000-barrel capacity refinery located near Portharcourt, the Niger Delta Petroleum refinery in Delta state and six modular refineries that should come on stream soon.

Explore the Nairametrics Research Website for Economic and Financial Data

About 90% of the refined petroleum products consumed in Nigeria are imported. The nation’s refineries located in Kaduna, Warri, and Port Harcourt with a combined nameplate capacity of 445,000 bpd have long operated at low levels due to many years of underinvestment and poor maintenance. Despite continuous talk of revamping the
refineries, in 2019, combined capacity utilization of Nigerian refineries fell to 2.5%, an all-time low annual activity level since 1998 when NNPC started providing the data. Last year, Pipelines & Product Marketing Company (PPMC) reported that it imported 9,158,528mt of refined products (PMS, HHK, AGO & ATK) while it evacuated only 963,302mt of refined products from Nigerian refineries, implying local production was just at 10.5% of total refined products available for distribution. Going by the historical performance of these refineries, it is safe to agree with the Vice President that the Nigerian government has no business running refineries.

READ: Hotels in Nigeria are on the verge of collapse

Asides the modular refineries mentioned by the Vice President expected to come on stream soon, the country is also patiently awaiting Dangote’s 650,000 barrels perday capacity refinery. The BUA group also recently announced plans to commence a 200,000 barrels per day refinery and petrochemical plant in Nigeria to be located in Akwa Ibom State. Although it is widely believed that the local refining operations will reduce the nation’s reliance on
imported refined products, the question in the minds of many Nigerians is how local refining of petrol will impact the pump price. In this regard, the Minister of Finance, Budget and National Planning, Zainab Ahmed, stated that refining petrol locally will not significantly reduce the price of petrol since the refineries will sell at the international price, noting that the only expected savings will be freight or shipping.

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READ: DPR reveals 4 major areas of focus for downstream operations of oil and gas sector

That said, Nigeria as a country has a lot to benefit from being a net exporter of refined petroleum products. Nigeria is the second largest producer of oil in Africa. The combination of rising shale production in the US, continued oversupply in the export market and weak demand, means the market for Nigerian crude is quite uncertain and a shift from export of crude to refined products bodes well for the country. The start up of these refineries will also
attract investment in warehousing and storage facilities, enhance employment opportunities and conserve the foreign exchange earnings of the country

READ: Six Modular Refineries billed to commence operation, FG says 

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CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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Key ‘side-hustles’ Nigerian Bankers supplement their income with

The need to meet up with their financial obligations has forced some bankers to adopt side hustles.

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bankers, How much banks pay, Key 'side-hustles' Nigerian Bankers supplement their income with

The headline above seems a little inappropriate given the earnings of Bankers, vis-à-vis statistics on salaries and wages in the Nation.

The average Nigerian Banker earns at least four times the poorly implemented National minimum wage of N18,000; gets his pay promptly without being owed arrears, and enjoys other employment benefits, such as healthcare, without hassles.

Why then would these privileged few, whose wage bill cost the 13 NSE listed banks, a whopping N178b in the first three months of 2020, lockdown notwithstanding, need to supplement their already impressive income?

READ: 3 major ways COVID-19 will affect Banks’ 2020 profits

Simple, because they need to meet up with their financial obligations.

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The expectations are high for anyone with a decent job in a country where the unemployment rate is currently 27.1%, and where 28.6% of its population are underemployed.

The expectations are even higher for those whose work is in the banking sector, of whom it is erroneously believed, have access to unlimited funds, and an endless flow of credit facility, because they facilitate the consummation of volumes of such transactions daily.

(READ MORE: Naira expected to be under pressure until backlogs for FX payments are cleared )

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The peculiarity of HR policies in Nigerian banks does not allow for ‘helping’ of relatives into the same system, as is obtainable in the Nigerian Civil service. Hence, the basic assistance which Bankers can offer their ever-expanding network of dependants is direct financial aid, forcing them to engage in moonlighting activities to meet up the ‘hype’.

The activities below are from close observation and interactions with Nigerian Bankers.

Forex dealings

The existence of different exchange rates, coupled with the scarcity of FX for most sectors of the economy has given rise to opportunities for arbitrage and round-tripping. Most bankers, who by virtue of their jobs have become privy to their customers’ FX needs, are able to broker deals; matching the demand of FX with supply, and earning handsome margins in the process. Gratitude, loyalty, and referrals from their customers are an added bonus for flouting their Bank’s internal policies on staff participation in FX dealings.

Such dealings have in recent times expanded to include transactions in cryptocurrencies.

Personal professional practice

Nigerian Banking industry is a melting pot of various first degrees, with some using their bank jobs as a stop-gap for their employment problems, as they seek to improve on their chosen professions. Hence, it is not uncommon to see bankers start and run their startups in other fields, while still in paid employment of their banks.

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Although, the Banks are likely to frown on not getting 100% commitment from their employees; they continue to provide a rich base of potential clients for these startups and have been their customers too.

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Sports betting and Mobile Money agencies

Sports betting in Nigeria has opened up a new world of investment possibilities for sports enthusiasts and shrewd businessmen. Since 2009, when the first online sports betting site launched in Nigeria, over twenty more have joined to compete for the market in Africa’s most populous black nation, and they all seem to be thriving, as each sports competition sees the unveiling of another sports betting site in Nigeria.

(READ MORE: Bank like a hero with the Stanbic IBTC Super App “Voice Banking” feature)

Bankers, with their knowledge of the industry figures, have had a first mover’s advantage in being agents of these sport betting firms.

The same holds true for Mobile Money agencies, where Bankers have been known to use the influence of their office to expedite mobile money agent approvals and secure POS terminals, which have consequently become inaccessible to the common man.

READ: Analysis: UACN, is the dividend worth it?

Other activities

As with most business endeavours, Bankers generally indulge in businesses, in which they have a comparative advantage. Bankers in big cities use their cars to run shifts under popular cab-hailing services; some moonlight as real estate agents, because they can match customers with their real estate needs. A few others have become millionaires, by investing in their customers’ businesses. The possibilities are endless, as Bankers seek to make ends meet through their ingenuity, while staying relevant in their careers.

Explore the Nairametrics Research Website for Economic and Financial Data

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Cyprian Ekwensi in his classic novel ‘Chike and the River’, made popular the phrase of a man who lives by the bank of the Niger, washing his hands with spittle. Sadly, this has become the lot of most Nigerian Bankers, as they live from paycheck to paycheck, exploring one loan option to pay off a previous loan, even as they condescend to their customers in volunteering financial advice, that they are better off implementing in their personal finances.

No one is immune to the economic squeeze our double-digit inflation has brought on fixed income earners, especially not our beloved bankers.

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