May & Baker of Nigeria plc, the nation’s second-biggest pharmaceutical maker by market value, started the year with a loss after tax of N47.12 million, as the company continues to grapple with rising production costs.
For the year first three months, the company posted a loss after tax of N47.12 million, from the same loss position of N87.67 million it recorded the same period of the corresponding year (Q1) 2014.
Sales increased by 10.44 percent to N1.52 billion as the company introduces innovative products with a view to increasing share of the market.
The company received a one-two punch as the bottomline due to rising production costs increased by 16.50 percent to N1.08 billion in Q1 2015, compared with N927.16 million the previous year.
Cost of sales ratio moved to 71.05 percent in 2015 from 66.84 percent in 2014, which means the company is spending more on input costs to produce one unit of its products.
Analysts say the recent devaluation of the naira is leading to some costs pressures for most pharmaceutical firms in Africa largest economy, Nigeria, who import most of their raw materials.
The amount spent by May & Baker on diesel and maintenance of generators for the purpose of production hinders the company from tapping into the Nigeria growing economy.
While these challenges seem insurmountable, the company has taken a proactive step by obtaining World Health Organisation’s (WHO) certification and pre-qualification process, making the company an attractive harbour for investors.
May & Baker Nigeria is one of two quoted companies that had received the high-profile certification and is currently in the process of completing the pre-qualification of its products from its WHO-standard manufacturing complex at Ota, Ogun State – The Pharma Centre.
Investors are also attracted to the company’s stocks given its innovative product pipelines.
The stock rose 4.47 percent to N1.87 by the 3:55 p.m. close in Lagos, the commercial capital.
May & Baker’s total assets increased by 6.94 percent to N7.77 billion in Q1 2015, from N8.35 billion the previous year. Finance costs reduced by 4.80 percent, which means the company is paying interest on loans owed to banks. Total borrowings reduced by 14.70 percent to N3.30 billion in Q1 2015, as against N3.87 billion in 2014.
The proportion of debt in its capital structure is high as its debt to equity ratio hits 108.20 percent. It means over 100 percent of the company’s balance are funded by lender’s money.
The company has market capitalisation of N1.83 billion, while total shares outstanding is N980 million.
BALA AUGIE
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