GlaxoSmithKline Consumer Nigeria Plc, the publicly traded local unit of the U.K.’s biggest drug maker has been hard squeezed by a challenging business environment as the company’s earnings slumped.
The 2015 audited financial statement of the company showed net income fell by 48.28 percent to N954.5 million from N1.84 billion as at December 2014. Sales remained flattish at N30 billion as the company continues to grapple with weak consumer spending.
GSK like any other consumer goods firm has been hard hit by a slow growth caused by a significant drop in price of oil and a weak local currency. Oil accounts for two thirds of government revenue and nearly all of foreign exchange earnings.
The devaluation of the naira twice since March 2014 has spiraled up the company’s cost of production while fuel shortages of the same year impacted negatively on margins.
GSK’s net margin, a measure of profitability and efficiency were down to 3.11 percent in 2015 from 6.02 percent at December 2014.
Return on equity (ROE) fell to 7.33 percent in 2015 as against 14.21 percent in 2014; due to fall in earnings.
The company’s share price closed at N24.94 on the floor of the exchange while market capitalization was N29.87 billion.