Cadbury Nigeria Plc has reported a significant financial recovery for the 2025 fiscal year, posting a net profit of N12.1 billion which reverses the N22.2 billion loss recorded in the previous year.
This turnaround was driven by a strong 31% surge in revenue, fueled by the performance of its flagship brands in the Nigerian market, marking the company’s first profitable year after two challenging years of deepening losses.
Okay News reports that despite this encouraging rebound, analysis of the unaudited results indicates the company is in the early stages of recovery with several areas requiring improvement. While gross profit margins improved to 21.6% from 14.1%, the net profit margin of 7.1% suggests operational inefficiencies, meaning only N7 remains as profit from every N100 of revenue, highlighting room for enhanced cost management.
A major concern remains the company’s high leverage, with a debt-to-equity ratio of 3.99 indicating significant financial risk, while retained losses stand at N25.2 billion. Experts estimate it could take about two more years of steady profits at the current rate to completely eliminate these accumulated losses. Additionally, a current ratio of 0.71 signals potential liquidity challenges in meeting short-term obligations, underscoring the need for efficient working capital management.
The equity market has responded positively to the turnaround, with Cadbury’s stock surging 178% in 2024. However, its market capitalization of N146 billion significantly outpaces its net asset value of N16.5 billion, reflecting high investor expectations for future performance. For sustainable growth and a potential resumption of dividend payments last made in 2023, the company must focus on expanding profit margins, reducing leverage, and tightening liquidity controls to build on this recovery.
