Mecure Industries Plc has reported a pre-tax profit of N3.303 billion for the financial year that ended December 31, 2024, representing a 10.49% year-on-year (YoY) decline from 2023.
The decline was primarily driven by a sharp rise in finance costs due to increased borrowing and higher interest expenses.
Despite the drop in profitability, Mecure posted a strong 45% topline growth, with revenue reaching N46.027 billion for the year.
This growth was largely driven by a 44% increase in revenue from acute medicines, which accounted for over 54% of total revenue.
Key highlights (2024 vs 2023)
- Revenue: N46.027 billion +44.92% YoY
- Cost of sales: N31.242 billion +45.49% YoY
- Gross profit: N14.784 billion +47.75% YoY
- Marketing expenses: N2.406 billion +110.07% YoY
- Administrative expenses: N4.323 billion +39.72% YoY
- Operating profit: N8.281 billion +36.19% YoY
- Finance cost: N4.979 billion +108.24% YoY
- Profit after tax: N2.329 billion -20.05% YoY
- Earnings per share: N0.58 -20.55% YoY
- Cash and cash equivalents: N398 million -43.71% YoY
- Total assets: N54.838 billion +31.40% YoY
- Total borrowing: N31.057 billion +60.19% YoY
- Shareholders’ funds: N13.959 billion +14.14% YoY
Insights and analysis
Revenue growth vs. cost pressures: While Mecure achieved strong revenue growth, the cost of sales grew at an even faster pace, increasing by 45.49%. This led to a marginal decline in the gross profit margin by 0.81 percentage points, down to 32.12%.
Operating profit rose by 36.19% to N8.281 billion, supported by revenue growth.
However, operating expenses, particularly marketing expenses (+110.07% YoY) and administrative costs (+39.72% YoY), weighed on profitability.
As a result, the operating profit margin contracted to 17.99%, down from 19% in 2023.
Rising finance costs weighed on profitability: One of the most significant challenges for Mecure in 2024 was the sharp increase in finance costs, which surged by 108.24% YoY to N4.979 billion. This accounted for over 60% of operating profit, substantially limiting bottom-line growth.
The rise in finance costs was driven by:
- Increased borrowing: Total debt rose 60.19% YoY to N31.057 billion.
- Higher interest expenses: Interest costs surged by 109% to N4.903 billion, leading to a contraction in the interest coverage ratio to 1.64 (from 3.22 in 2023).
- Higher leverage: The gearing ratio increased by 14% to 68.71%, and the equity multiplier rose from 3.41 to 3.93.
Liquidity and financial position: Mecure’s liquidity position weakened, with cash and cash equivalents plunging 43.71% YoY to N398 million.
However, the company maintained a relatively stable short-term liquidity position, as reflected in an improvement in the current ratio to 1.42 (from 1.31 in 2023).
Despite these liquidity challenges, total assets expanded by 31.40% to N54.838 billion, indicating ongoing investments and business expansion efforts.
Key takeaways
- Revenue surged by 44.92% YoY, driven by strong sales of acute medicines.
- Profitability declined as higher finance costs eroded gains from revenue and operating profit growth.
- Operating margins contracted due to rising marketing and administrative expenses.
- Finance costs soared by 108% YoY, significantly impacting the bottom line.
- Liquidity weakened, with a sharp decline in cash reserves, although the current ratio improved slightly.
- Debt levels increased, raising concerns about future interest obligations and leverage.
Overall, Mecure Industries demonstrated strong revenue growth in 2024, but rising costs and surging finance expenses eroded profitability. While business expansion is evident, the company must focus on managing debt levels and controlling expenses to improve margins and sustain long-term financial health.
