Neimeth grows profit by 83%

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By Taofik Salako, Capital Market Editor


Neimeth International Pharmaceuticals Plc is riding on the strength of operating and finance efficiency to grow its bottom-line as the pharmaceutical company continues to improve its market share in the highly competitive healthcare sector.

Key extracts of the full-year audited report and accounts for the year ended September 30, 2019 and the first quarter of this business year ended December 31, 2019 showed that the company sustained impressive growth in both sales and profitability.

The audited report and accounts of Neimeth International Pharmaceuticals showed that the company recorded modest growth in sales but considerable improvement in operating efficiency boosted the profitability of the company.

Administrative expenses dropped by N168 million from N543 million in 2018 to N375 million in 2019 business year, representing a 30.9 per cent decrease. Operating profit rose by 47.9 per cent to N413.38 million in 2019 as against N279.42 million in 2018.

Finance costs also declined from N112.96 million to N108.9 million. Profit before tax jumped by 82.9 per cent from N166.46 million in 2018 to N304.44 million in 2019.

After taxes, net profit increased by 48.7 per cent from N148.02 million to N220.15 million. With these, earnings per share rose by 50 per cent to 12 kobo in 2019 as against 8.0 kobo in 2018.

The top-line had sustained steady growth as turnover rose from N2.27 billion in 2018 to N2.37 billion in 2019. Gross profit also indicated similar modest growth rising from N1.16 billion in 2018 to N1.20 billion in 2019.

The company’s balance sheet also showed considerable improvements as total assets grew by 19 per cent to N2.75 billion in 2019 compared with N2.31 billion in 2018. Shareholders’ funds improved by 24.6 per cent from N858.83 million to N1.07 billion.

Performance ratios underscored significant improvements in the profitability of the company. While gross profit margin dropped from 51.1 per cent in 2018 to 50.6 per cent in 2019 due to industry-wide headwinds, operating profit margin, which denotes the company’s managerial ability to curtail headwinds and drive core business operations profitably, improved by five percentage points from 12.3 per cent in 2018 to 17.4 per cent in 2019.

Pre-tax profit margin-which measures untaxed profit per unit of sales, nearly doubled from 7.3 per cent in 2018 to 12.8 per cent in 2019. Net profit margin, after taxes, also improved from 6.52 per cent in 2018 to 9.28 per cent in 2019.

The first quarter report for the three-month period ended December 31, 2019 showed that turnover leapt by 167.1 per cent to N606.5 million compared with N227.07 million recorded in comparable period of 2018.

Gross profit quadrupled by 465.6 per cent from N53.52 million to N302.71 million. The company replaced operating loss of N119.3 million in December 2018 with operating profit of N111.68 million by December 2019.

The bottom-line turned positive with a net profit of N82.65 million in December 2019 as against net loss of N139.16 million in December 2018.

Earnings per share improved from a negative of 8.0 kobo to a positive of 4.35 kobo, showing a greater prospect for shareholders’ return in 2020. Total assets and shareholders’ funds also improved to N2.90 billion and N1.15 billion  last December.

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The sustained growth further strengthened the outlook of the healthcare company. Neimeth had declared a scrip dividend of 10 per cent for the 2018 business year.

The company distributed about 172.65 million ordinary shares of 50 kobo each as bonus shares to shareholders on the basis of one bonus share for every 10 ordinary shares held.

Managing Director, Neimeth International Pharmaceuticals Plc, Matthew Azoji, said the results were evidence that the company has regained its momentum and steadily growing its market share.

He said the company’s medium term strategic plan aims at building on the enviable pedigree of the six decades old company unto a new era of greater achievements for stakeholders.

“Our strategic plan is to reposition the company to play greater roles in the healthcare industry, deliver better returns on investment to shareholders and greater benefits to all other stakeholders,” Azoji said.

He assured that the management of the company would continue its deliberate strategy of cost management to ensure that top-line gains translate into improvement in returns to shareholders.

Azoji, who was named among the top 25 CEOs in Nigeria by BusinessDay Newspaper, said sustained growths across the quarters and over the past two years are results of early gains of strategic initiatives to drive growth and profitability.

“In the new year and beyond, the company will record greater strides as we expect ongoing implementation of more strategic initiatives to firm up sales and improve our returns on investment,” Azoji said.

He pointed out that Neimeth had in 2019 won Sectoral Leadership Award for the healthcare (pharmaceuticals) sector at the Nigerian stock market. The annual award which is based on the performance of quoted companies on the Nigerian capital market was organised by Pearl Awards.

Neimeth is over 61 years old as a business in Nigeria. It transited from an arm of a foreign transnational, Pfizer Inc. to Neimeth International Pharmaceuticals Plc in May 1997 through a management buyout of the US to become a wholly owned indigenous company.

Since then, the company has metamorphosed into a leading brand in the Nigerian healthcare industry with products that meet international standards.