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Cadbury Embarks on Aggressive Cost Control Measure

Category: Investors NewsBeat

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Cadbury Embarks on Aggressive Cost Control Measure



May 19, 2011 by AUSTIN IMHONLELE 
…Determined to build cash reserves
Cadbury Nigeria plc, a confectionery manufacturer, has identified the challenge of efficient manufacturing and aggressive cost control, as the key focal point of its management in 2011; even as it tries to build its cash reserves to pay future dividend to its shareholders.
Speaking at the 46th annual general meeting in Lagos, chairman of the company Atedo Peterside said the company would not pay dividend in spite of its impressive performance of about N29.17 billion recorded in 2010 financial year, which is 14 percent increase, compared with N26 billion in 2009.
According to Peterside, “the turnaround in the balance sheet is already occurring and we are hopeful that a positive general reserve will be achievable in the nearest future.”
Although he tried to give details of the state of affairs that have been holding back the company from fulfilling its responsibility to the shareholders, some of the shareholders still felt unhappy.
The company’s chairman noted that the directors were unable to recommend the payment despite encouraging results, because the company’s balance sheet still carried negative general reserves, saying no dividend could be lawfully paid until the general reserves in the balance sheet was in positives.
He further said, “With the difficulties being faced by many of the company’s distributors, suppliers and service providers to access trade credit facilities, Cadbury, with the support of partner banks has supported the efforts to reduce the overall cost of borrowing.”
At the moment, the company intends to continue with the plan of reinvestment in upgrading capacity and flexibility in its factories, which reflects its long-term commitment to the long-term viability of the Nigerian economy and position it to take advantage of the opportunities in West African markets in future.
“The importance of the overall inflationary environment has impacted consumer pricing on some brands, which in turn has partially dented consumer confidence.
“Inflation will continue to be a critical determining factor to growth, particularly as oil prices strengthen,” he said.
The management, however, advised shareholders to open bank accounts, stock broking accounts and Central Securities Clearing Systems accounts, all of which are required for any e-dividend and e-bonus that may be declared in future.
Analysts say the company’s figures, which show a turnover of N29.17 billion, an increase of 14 percent over N25.586 billion recorded in 2009, a gross profit of N9.25 billion and operating profit of N1.73 billion against N153 million earned in 2009, “is no doubt an improved performance which is a reflection of the capacity investments the company has been making and management’s relentless focus on maximising efficiencies in our core business processes and systems through aggressive cost control.”
The management had deployed more funds within the last one year, availed through the right issue, significant capital investment projects designed to ensure that its manufacturing capability operated at optimum efficiency.
At Thursday, last week, the company’s stock lost 40 kobo, or 1.8 percent, to N21.6, by 2:30pm, in Lagos, its lowest level since April 20. It has fallen 16 percent this year compared with a 5.6 percent increase in the Nigerian Stock Exchange All-Share Index over the same period.
Source: Businessday

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