• APRIL 26, 2001

Cadbury 1Q: Taxes hit net margins

Cadbury India Limited has posted a net profit of Rs 124 m for the quarter ended March 31, 2001. This is up 18.5% as compared to Rs 105 m net profit declared during the quarter ended March 31, 2000. The company's turnover is up 8% during the period.

(Rs m) 1QFY01 1QFY02 Change FY01
Net Sales 1,393 1,499 7.6% 6,711
Other Income 17 19 8.7% 121
Expenditure 1,191 1,247 4.8% 4,763
Operating Profit (EBDIT) 203 252 24.1% 1,949
Operating Profit Margin (%) 14.6% 16.8%   29.0%
Interest 8 6   31
Depreciation 50 58 15.5% 219
Profit before Tax 162 207 27.9% 820
Exceptional items -2 1   -3
Tax 55 84 51.6% 297
Profit after Tax/(Loss) 105 124 18.5% 520
Net profit margin (%) 7.5% 8.3%   7.8%
No. of Shares (eoy) (m) 23.8 35.7   35.7
Earnings per share* 17.6 13.9   14.6
Diluted Earnings per share* 11.7 13.9   14.6
Current P/e ratio   32.4    

Cadbury too seems to have been affected by the slowdown in consumption. Cadbury's turnover grew by 12% in FY01 (YoY). Even more interestingly, the company's turnover growth in the first quarter of 2000 was nearly 17% YoY.

The chocolate & confectionery major improved its operating margins by a significant 220 basis points but failed to convert this into a significant net margin improvement. A huge 52% jump in Cadbury's taxes during 1QFY02 hampered net profit growth. However, the company's interest burden has declined by a significant 29% during the quarter.

At the current price of Rs 450 the stock trades at a P/e multiple of 32 times its annualised earnings. The company dominates the chocolate scene in India and enjoys pricing power over the consumers. On the longer term the company looks very strong. However, in the near term a recovery in consumption is a factor of the uncertain monsoons.

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