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Cadbury Nigeria Plc profit margin has been lifted by an expansion in sales as the consumer goods giant implemented price increases across products to fend off rising input costs and inflationary pressures.
Despite depressed consumer wallets and sentiments, Cadbury’s gross profit margin moved to 21 percent in June 2022 from 11.71 percent the previous year.
A higher gross margin means the company is efficient in earning profit and there is enough left to cover operating expenses and exceptional items.
Revenue spiked by 50.48 percent to N27.87 billion in the period under review from N18.52 billion the previous year.
Of course, the growth at the top line is reflective of price increases across products in major brands including Bournvita, and Cadbury hot chocolate.
It is worthy to note that earnings have been rising steadily even amid the Covid-19 crisis and current uncertainties caused by the war in East Europe because the products manufactured are perceived as necessity by consumers.
Cadbury reverted to the path of profitability-which means it will be paying dividend- as it posted a profit after tax of N2.34 billion in June 2022 from a loss of N516.16 million the previous year.
It posted operating profit of N2.84 billion in the previous year from a loss of N609.95 million as at June 2021.
However, there are concerns Cadbury and peer rivals may find it difficult to continue to pass on higher input cost to consumers who are reeling from red hot inflation and spiraling diesel prices could make it difficult for
The price of diesel had risen by over 200 per cent in less than nine months. Gas, usually purchased with dollars, has had its price elevated since Russia’s invasion of Ukraine early in the year.
Manufacturers spent N425 billion on alternative energy sources such as gas, low-pour fuel oil, diesel, and petrol between 2017 and 2021.
The Director-General of MAN, Segun Ajayi-Kadir, said with forex and energy crises raging, Africa’s most populous nation could lose its manufacturing sector without a comprehensive policy.
It is important to note that sector players are spending more on raw materials that they import due to Russia’s invasion of Ukraine as both countries are the largest producers and exporters of the grains.