Follow Us on Google Discover
Cadbury Nigeria’s nine-month numbers read like a recovery story. The related-party notes read more like the accounts of a well-run Mondelez branch office.
Cadbury Nigeria’s nine-month profit of N10.1 billion already beats its whole of 2025. Gross margin is back near 29%, and borrowings are down by a third. For minority shareholders who have waited years for a turnaround, this looks like it. The more useful question is who the turnaround is working for.
Start with what Cadbury buys. Purchases of 3-in-1 Hot Chocolate from sister company Cadbury Ghana reached N24.9billion in nine months, about 28% of total cost of sales. One of the company’s two beverage brands is, in effect, a finished good imported from the group at a transfer price minorities cannot see (in this financial statement).
Then what it sells. Cocoa butter sales to Mondelez Egypt (N4.6 billion) and Mondelez South Africa (N3.9 billion) total about N8.6 billion. That is roughly 94% of the intermediate cocoa segment and over four-fifths of export revenue. The headline that exports doubled is better put as ‘the group bought a lot more cocoa butter from Lagos.’
Also Read
The group also sets the price and pays slowly. Amounts due from related parties jumped to N7.2 billion from N1.6 billion at December, with South Africa alone owing N3.9 billion. The notes record a payment from it of “1,236” with no unit attached, and elsewhere describe a net balance due to South Africa that the balance sheet contradicts. Sloppy disclosure on the biggest intercompany receivable is not reassuring.
Money ran the other way much faster. Amounts owed to related parties halved to N6.3 billion from N12.8 billion, most of it settled with Ghana. Cadbury also repaid N4.5 billion of intercompany loan principal and N2.3 billion of interest. Add the roughly N12 billion swing in the net related-party trade position to that N6.8 billion of loan service, and close to N19billion of cash was either paid to the group or left uncollected from it in nine months. Operating cash flow over the same period was N5.7 billion. Restricted cash, meanwhile, fell from N5.1 billion to N0.6 billion: trapped dollars freed and sent where they were owed.
Then there is the rent on the brands. Royalties plus technical and management fees to Mondelez AMEA came to N2.2 billion, about 15% of pre-tax profit, which is a touch below last year’s figure.
Even the earnings growth carries a group accent. Operating profit fell 10% as selling and distribution costs more than doubled to 15.8% of revenue. Pre-tax profit rose only because net finance costs of N2.1 billion became income of N200 million. Lower interest on a smaller parent loan is real progress, but a N1.6 billion exchange gain on that same loan did much of the rest. Part of this year’s profit growth came from revaluing what Cadbury owes its parent.
Strip out the group and the domestic business barely moved. Sales in Nigeria rose 1.8%. Bournvita and 3-in-1 revenue fell 6%. Inventories are up 35%, and cash conversion sits near 56% of profit. The current ratio is still below one.
None of this is improper. It is how multinationals run subsidiaries, and paying down the expensive parent loan was the right call. But minorities own 20.6% of a company whose inputs, outputs, financing and brands all run through Mondelez, with a retained loss of N18.2billion still standing between them and a dividend.
Before paying up for the recovery, investors should ask three things. How are the Ghana and cocoa butter prices set? When do South Africa and Egypt pay? And does the next spare naira go to the parent’s loan or to shareholders?
Cadbury Nigeria is recovering but whether its minority shareholders are, is a separate question.
