nigeriaCadbury Nigeria

Company Profile and History

Cadbury Nigeria was incorporated in 1965 and is the market leader in sugar confectionery, gum and food beverages in Nigeria with strong market shares across all three categories. The company operates through two segments, Confectionery and Food Drinks, and Intermediate Cocoa Products. Cadbury Nigeria is a member company of Cadbury Schweppes Plc, a major player in the global confectionery and beverages markets with 40,000 employees and business operations in 200 countries. Cadbury's initial objective in the 1950s to source cocoa and prospect for a market in Nigeria led to the establishment of a manufacturing facility in Ikeja, north of Lagos, in 1965.

Cadbury Nigeria also owns a cocoa processing business, the Stanmark Cocoa Processing Company.

In Country Location

Lateef Jakande Road, Agidingbi, Ikeja, Lagos;
Tel: 234-01-2717777; Fax: 234-01-2717798

Services and Products

The Confectionery and Food Drinks segment is involved in the production and sale of Bournvita, Bubba, Stimorol, Tom Tom, Trebor, Ahomka, Buttermint, and Eclairs products. The Intermediate Cocoa Products segment offers cocoa powder, cocoa butter, cocoa liquor, and cocoa cake. It distributes its products through a network of 43 distributors.

Number of Employees

2,300 employees

Financial Information

Cadbury Nigeria recorded a sales income of about N24.3 billion in 2008, representing an improvement by N4.4 billion or 22.11 percent over the preceding year's N19.9 billion. Loss before tax dropped by N1.4 billion or 33.33 percent to N2.8 billion, as against the N4.2 billion reported in the corresponding full year of 2007, taxes to government within the period under review dropped to N95.4 million from N3.5 billion. Loss attributable to shareholders for the period, however, jumped to N2.8 billion from a marginal N726.9 million in 2007.

Currency in Millions of Nigerian Nairas Jan 2005 Jan 2006 Jan 2008
Press Release
Revenues 22,152.7 29,454.2 19,937.0
TOTAL REVENUES 22,152.7 29,454.2 19,937.0
Cost of Goods Sold 13,448.2 18,235.1 --
Cost of Goods Sold 8,704.4 11,219.1 19,937.0
Selling General & Admin Expenses, Total 4,528.0 6,454.1 --
Other Operating Expenses -- -- 24,762.0
OTHER OPERATING EXPENSES, TOTAL 4,528.0 6,454.1 24,762.0
OPERATING INCOME 4,176.5 4,765.0 -4,825.0
Interest Expense -682.1 -1,091.9 --
Interest and Investment Income 354.9 180.0 --
NET INTEREST EXPENSE -327.2 -911.9 --
Other Non-Operating Income (Expenses) -- -- 628.0
EBT, EXCLUDING UNUSUAL ITEMS 3,849.3 3,853.1 -4,197.0
EBT, INCLUDING UNUSUAL ITEMS 3,849.3 3,853.1 -4,197.0
Income Tax Expense 1,036.7 1,142.2 -3,470.0
Minority Interest in Earnings -3.9 -6.4 --
Earnings from Continuing Operations 2,808.7 2,704.5 -727.0
NET INCOME 2,808.7 2,704.5 -727.0

Market Share

Cadbury Nigeria is the market leader in sugar confectionery, gum and food beverages in Nigeria, with an overall market share of 58%

Business Objective

“Our vision is to be the biggest and the best confectionery company in the world”

Business Model

“Underpinning the new Cadbury, in June 2007 we introduced our Vision into Action (VIA) business plan, a strategy for 2008-2011 to drive the financial performance of the focused confectionery business. Implementing this strategy has been the top priority for our global team and has brought about a number of important changes in what we prioritise, how we measure our progress and the way we behave.

Our VIA sets out growth as a main priority which is represented by the mantra-‘Fewer, Faster, Bigger, Better’. This priority channels our efforts towards the following initiatives: Category focus for scale and simplicity; Drive advantaged, consumer-preferred brands and products; Accelerate white space market entry via “Smart Variety”; Create advantaged customer partnerships via total confectionery solutions; and Expand product platforms and strengthen route to market through partnership and acquisition

We recognise that it is not enough to grow faster: we must also be more profitable. Our efficiency target is encapsulated in the ambition to improve our underlying operating profit margins from around 10% in 2007 to mid-teens by 2011 through: realise price and optimise customer investment; reduce SG&A cost base; and deliver supply chain cost reduction and reconfiguration initiatives.

As we develop our focus on being a pure-play confectionery business we will continue to invest in capabilities to support our people to deliver on our growth and efficiency priorities: Operate a category-led business enabled through consistent commercial capabilities; invest in science, technology & innovation to deliver preferred products at competitive cost ;drive focused decision making and speed of execution; Sharpen our talent, diversity and inclusiveness agenda ; and leverage partnerships to streamline processes and reduce costs.

In order to generate superior returns for our shareowners, our VIA will deliver six financial targets: organic revenue growth of 4% - 6% every year; total confectionery share gain; mid-teens trading margins by 2011; strong dividend growth; an efficient balance sheet; and growth in Return on Invested Capital (ROIC).”

Ownership of Business

Cadbury Nigeria was incorporated in 1965 as a 100% owned subsidiary of Cadbury Schweppes. In 1976, 40% of the business was sold to private Nigerian investors through a listing on the Nigerian Stock Market and the Group's holding was reduced to 40% in 1978.

Following changes to foreign company ownership regulations in Nigeria in 1995, the Group has sought to increase its holding in Cadbury Nigeria as part of a long-term strategic aim to grow its confectionery business in Africa and use Nigeria as a base for further expansion in West Africa.

In February 2006, the Group took majority control of Cadbury Nigeria through an increase in its stake from 46.4% to 50.02%.

Benefits Offered and Relations with Government

Cadbury Nigeria was involved in a financial scandal which led to the banning of top officials of the company from holding directorship positions among other penalties for ‘’sharp practices’’.

In June 2006, the Security and Exchange Commission (SEC) expressed concern on issues arising from Cadbury’s annual reports and accounts for 2005, particularly in the areas of inadequate disclosure, non-compliance with the corporate governance code and obtaining loans for the payments of dividends to shareholders, contrary to SEC regulations. Cadbury paid a fine of N100, 000.00 in the first instance and a penalty of N 5,000 per day from 30 June 2002 to 14 December 2006.

The National Agency for Food and Drugs Administration and Control (NAFDAC) provides testing and certification of imported and domestically produced food, drug, cosmetic, medical, water and chemical products:

Food - Registration Procedure

An application for the registration of processed Food shall be made by the manufacturer; in case of a manufacturer outside Nigeria, such shall be represented in Nigeria by a duly registered company or individual with facilities to effect a recall of the product when necessary; an applicant for a manufacturer outside Nigeria must file evidence of Power of Attorney from the manufacturer which authorizes him to speak for his principal on all matters relating to the latter's specialties; the manufacturer, in the case of imported processed foods, must show evidence that the he or she is licensed to manufacture the product(s) for sale in the country of origin (Manufacturer's Certificate). Such evidence must be by the competent Health Authority of the country of manufacture, and shall be authenticated by the Nigerian Mission in that Country.

Product Development

In 2009 Cadbury Nigeria offered to raise N22.218 billion by way of rights to existing shareholders, in a bid to enable the company reclaim its “pride of place” in the market.

The bulk of fresh capital is to be used to repay bank borrowings amounting to N15.55 billion or 72 percent of the offer's net profit, while the remaining N6.14 billion or 28 percent, will be invested in "improvement of capacity supporting infrastructure, efficiency initiatives and upgrade of utilities." According to the offer prospectus, the bank debt is actually N16.64 billion, but the difference is to be paid from the N818.80 million unutilised balance of the August 2005 rights issue proceeds, along with the N271.5 million accrued interest as at June 30, 2009.

On the future plans, the directors noted that after a major strategic review in 2008, Cadbury Nigeria "has commenced an extensive restructuring exercise to restore its path to profitable growth. The company has also identified significant growth potential from its core brands, Bournvita and TomTom, as they appeal to a very wide spectrum of Nigerian consumers having been available in the market place for almost 40 years." The strategy review, the board explained, "also focused on opportunities to improve efficiency and quality of products through a disciplined approach to international benchmarking and investing in infrastructure projects. This approach is expected to yield both productivity benefits as well as provide opportunities to streamline production processes and align the factory for future growth."

In an overview of the company's growth strategy, it also hinted of the review of its distribution network, key accounts and institutional customers, with the appointment of new ones to ensure the widest reach of its products. This, it said, had been done by redefining sales regions and establishing new ones. There has also been a review of the supply chain operations in a bid to enhance operational performance of key manufacturing lines and cost reduction.