Pharmaceutical companies, like other manufacturers, have had the last two years rough. Cheap imports from Asian countries make production in Nigeria anti-competitive. A foreign exchange crisis that only abated in 2017 meant that access to foreign exchange to buy raw materials was difficult. Where available, it threw spanners into most projections.

While May and Baker and Fidson seem to have kept their heads above water, Neimeth is still struggling. One could say the company clearly suffered an ‘annus horribilis’ (horrible year) in 2017:

  • A fire at its Oregun warehouse cost the company raw materials.
  • Its Managing Director had to step aside due to medical issues.
  • Turnover fell from ₦2 billion in 2016 to ₦1.5 billion in 2017.
  • Gross profit fell from ₦1.2 billion in 2016 to N929 million in 2017.
  • The company also recorded a Loss Before Tax of ₦404 million, compared to a Profit Before Tax of ₦95 million in 2017.

The fire outbreak, which occurred in March last year, led to a loss of raw materials worth ₦513 million. Full and final insurance payments of ₦190 million reduced the loss to ₦322 million.

Bright Spots

The animal health division of the company had an increase in growth in 2017. Revenue from that section increased from ₦25.4 million in 2016 to ₦35.9 million in 2017. Revenue from Ghana also increased from ₦17.3 million in 2016 to ₦44.3 million in 2017.

Projections for 2018

Things might be looking up: Results for the first quarter ended December 2017 showed a marked improvement. Turnover increased from ₦137 million in 2016 to ₦394 million in 2017. The company also made a profit before tax of ₦13.5 million compared to a loss before tax of ₦248 million in the corresponding period of the prior year.

Employees take up the most value added: Salary wages and other staff costs took up 183% of the total value added in 2017. Even if one was to blame the increase on penalties relating to pension obligations, the prior year’s figure was also high at 57%.

Q1 2018 shows a similar pattern with staff and other related costs gulping 60% of the ₦152 million value added.

Slim hopes for shareholders: Even if one was to annualize Q1 profit before tax across the remaining 3 quarters, Neimeth would still have negative retained earnings of close to a billion Naira.  Companies are discouraged by regulators from paying dividends when they have negative retained earnings.

 Neimeth International Pharmaceuticals Plc was incorporated on 30th August 1957 as a limited liability company. It commenced operations in 1958. On May 14th, 1997, Pfizer NY divested from the company through a management buyout. The company then underwent a name change to Neimeth Plc.

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