Despite the shrinking consumer wallet and harsh economic environment, healthcare company, GlaxoSmithKline Consumer Nigeria Plc, (GSK) grew its half-year 2019 net profit for the period ended 30th June, by 2.76percent to N372million from N362million in the corresponding period in 2018, while revenue grew 15.9percent to N9.96billion from N8.59billion for the period.
The company’s cost of sales, however, grew 3 percent from N6.34billion in half-year 2018 to N6.54billion in 2019, while net profit rose slightly to N372million from N362million.
GSK’s administrative expenses also dropped 27percent to N719million from N915million in 2018, however, its selling and distribution expenses grew 12.98 percent to N1.74billion from N1.54billion.
Figures from GSK’s consumer healthcare segment, consisting of oral care, over-the-counter (OTC) medicines and nutritional healthcare, show revenue remain flat at N3.06bn, however, the segment returned to a path of profitability with a profit of N136.18mn from a loss of N300.8mn in half-year 2018.
Also its revenue from pharmaceuticals segment consisting of antibacterial, vaccines and prescription drugs, grew to N6.89bn from N5.52bn while profit from this segment also dropped significantly by to N151mn from N497mn.
GSK had earlier announced plans to restructure its supply chain operation with effect from the third quarter of 2021.
And as part of its restructuring exercise which will take effect from the third quarter of 2021, GSK, recently announced the selection of Fidson Healthcare Plc as its local content manufacturing partner.
According to a statement by GSK, the manufacturing of its wellness and respiratory products will be “transitioned” to Fidson Healthcare.
“Until then it would be business as usual at the Agbara factory plant as GSK continues to ensure supply continuity for all its locally manufactured brands,” the company said.
Analysis of GSK’s full-year 2018 financial results shows possible reasons for its restructuring plans. Its consumer health care segment posted N112.49 million in loss in full-year 2018 an improvement in loss position by 83 percent compared to N701.960 million in 2017.
Operating expenses increased by 22percent on the year-on-year basis to N3.13 billion as against N2.56 billion recorded a year earlier, this saw the segment recording a loss of N37.6 million in operating profit.
During the period, growth in operating expenses outpaced that of revenue as segment’s top line grew 12.5percent. In the last 4 years, consumer health care segment contributed to an average 32 percent to total revenue of GSK, while the pharmaceutical segment contributed about 68 percent on the average to total revenue.
The pharmaceutical segment recorded a whooping N1.89 billion loss in 2016. Being a segment for imported GSK goods, the loss was due to foreign exchange scarcity witnessed in Nigeria in 2016 which saw the naira depreciate significantly in value against the U.S dollars on negative shock in the crude oil market.
However, loss position of the segment improved significantly as the Nigeria economy bounced back from recession in 2017, although the segment still recorded a loss of N15.5 million during the period.
OLUFIKAYO OWOEYE
