TomTom maker Cadbury records big loss despite sales growth

Nigeria’s Cadbury Plc, known for its Bournvita and TomTom sweets, suffered a big loss in 2023 despite a sales increase. The company reported a loss of N19.1 billion, a dramatic shift from the N583 million profit it made in 2022.

In its financial report published Tuesday, Cadbury’s revenue surged to N80.4 billion compared to N55.2 billion in the previous year.

However, the company reported a substantial loss before tax of N28.2 billion.

The loss was primarily driven by a foreign currency exchange loss.

• • • A company experiences a foreign exchange loss when the value of the currency it owes debts in (in this case dollar) strengthens compared to the currency its earns revenue in (naira).

The recent devaluations of the naira sent the currency’s value plummeting, and Cadbury, which has loans denominated in foreign currency, was hit hard.

These exchange rate losses totalled a staggering N36.9 billion, wiping out Cadbury’s profits and pushing it into the red.

No dividend

Investors will receive no dividend, the company said.

“The Directors do not recommend dividend for the current year,” it said, indicating it paid ₦751.3 million for 2022.

Cadbury’s brand categories, namely cocoa beverages, gum and candy and intermediate cocoa products. Cadbury bournvita, Cadbury 3-in-1 hot chocolate, are the main brands in the cocoa beverage category, while Tomtom classic, candy caramel, candy coffee, buttermint and clorets are the main brands in the gum and candy stable. Cocoa powder, cocoa cake and cocoa butter are the main products for the intermediate cocoa products.

Cadbury Nigeria Plc is owned 74.97 percent by Cadbury Schweppes Overseas Limited, incorporated in the United Kingdom. Cadbury Schweppes in turn is owned by Mondelēz International.

In January, Cadbury Nigeria said it was converting $7.7 million in loans from its parent company into equity as it aimed to reduce exposure to currency fluctuations and ease soaring finance costs after years of borrowing.

Cadbury, burdened by a $23 million loan from Mondelez International, faced crippling interest payments and a dollar shortage as the naira crisis exacerbated the situation.

The company said after the debt conversion, the parent company’s stake in Nigeria would rise to 79.39 percent.