Fidson Healthcare has returned to profitability. This is evident in its fourth quarter and full year results for the period ended December 31, 2019 which showed that the firm made N39.09 million and N312.02 million as profit after tax (PAT) in the fourth quarter of last year and for full year 2019 respectively.
Compared with same periods in 2018, Fidson Healthcare posted a loss after tax of N5.64 billion and N97.45 billion in the fourth quarter and full year 2018.
The return to profitability came amidst declining sales, owing partly to reducing purchasing power of the consumers and the general business environment of the country. Gross revenue for the last quarter of 2019 stood at N3.59 billion while for the entire 2019, the pharmaceutical giant realised N14.06 billion as gross earnings, compared with N4.78 billion and N16.23 billion in the corresponding fourth quarter and the entire 2018.
Fidson has three major product segments which are over the counter (OTC), ethical and consumer products. Revenues from OTC and ethical products declined by 7.6 percent and 8.4 percent respectively last year compared with 2018. In 2019, OTC accounted for 44 percent of Fidson’s revenue while ethical products contributed 56 percent.
Further analysis showed that both the product lines were responsible for the bulk of the companies’ cost of sales. In 2019, in spite of the fact that the ethical products contributed more to the overall revenue of the company, it cost Fidson N49 to generate N100 revenue for both OTC and ethical products. That was higher than N46 the firm expended in 2018 to generate N100 revenue for each of the two product lines.
Notwithstanding the return to profitability, investors remained unimpressed as the stock price has shed 16.1 percent from its share price year to date. At the close of business last Friday, the stock price of Fidson Healthcare closed at N2.60, representing 16.1 percent depreciation year to date.
Market participants applauded the decision the management made last year to seek foreign partnership, which people believed would lead to transfer of technologies, improved management and the adoption of good corporate governance. In other words, the return to profitability might not be unconnected with the strategic moves made by its management in the course of last year, resulting in a partnership with Ohara Pharmaceutical Company Limited, a leading Japanese pharmaceutical company limited in July 2019.
“Fidson Healthcare Plc, one of Nigeria’s leading pharmaceutical manufacturers, hereby announces the execution of a strategic alliance with Ohara Pharmaceutical Co. Ltd, a leading Japanese healthcare company. This alliance is a result of Fidson’s recent Rights Issue which saw Ohara’s shareholding in the company increased to 21.57%. The strategic alliance is aimed at supporting Fidson in fulfilling its commitment to provide the Nigerian market with the latest healthcare products and services. Ohara, being a major player in the Asian pharmaceutical market, will bring cutting edge technology and innovation through technology transfer, expertise, and knowledge sharing to enhance Fidson’s excellence and ascendency in the Nigerian pharma space.
“The alliance holds promise as a significant growth driver for both companies, particularly as a major factor for the development of local pharmaceutical manufacturing in Nigeria. The significance of collaborations of this nature to the emerging Nigerian healthcare system is evidently enormous, given the rapid population growth, the healthcare state and the living standards of the larger population in the country. Given this growing population, there is no doubt that Nigeria is in urgent need of a rapid improvement in the standard of healthcare delivery. This can only be accelerated through modernization and technological intervention which the alliance with Ohara aims to deliver”, the company announced last July.
In the last few years, Fidson has consistently paid dividend to shareholders. In 2017 and 2018, the company paid N0.15 per share as the final dividend around September. Analysts are unanimous that the firm won’t let investors down this time around.
TELIAT SULE
