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H1 2022: Neimeth inventories surge to N1.6bn, hit 7-yr high

H1 2022: Neimeth inventories surge to N1.6bn, hit 7-yr high

Fast Moving Consumer Goods (FMCG) firms are one of the hardest hit by Nigeria’s macroeconomic challenges. This is because these firms are not moving inventories off the shelves as weak consumer spending caused by rising inflation and spiralling unemployment curb product demand, leading to low stock or inventory turnover.

Neimeth recorded a surge in its inventories to reach N1.65 billion which indicates the highest in seven years, BusinessDay analysis shows.

The inventories comprise raw materials, work in progress, finished goods, spare parts, and goods in transit.

Neimeth recorded total inventories of N1.65 billion in the period which ended June 2022, up 5 percent from N1.57 billion in the same period of 2021.

The raw material segment of the inventories showed just a 2 percent increase to N802.7 million in June 2022 from N787 in June 2021.

Work in progress accounted for N146 million in June 2022, a 116 percent increase from N67.6 million in the same period of 2021.

Finished goods amounted to N490.5 million, up by 14.6 percent from N427.8 million in the period reviewed.

Spare parts in the inventories are worth N18.6 million in the first half of 2022, down 9 percent from N20.4 million in the first half of 2021.

Goods in transit accounted for N196.2 million in the period ended June 2022, down 26.5 percent from N267 million in the same period of 2021.

The pharmaceutical company recorded a turnover worth N1.82 billion in the first half of 2022, indicating a 9 percent decrease from N2 billion in the same period of 2021.

Neimeth reported a loss of N133.6 million in the first half of 2022 from a profit of N84.8 million in the first half of 2021.

Read also: Neimeth eyes N5bn fresh capital through rights issue, private placement

The cost of sales rose to N1.1 billion in the first half of 2022, a 3.7 percent increase from N1.06 billion in the first half of 2021.

Gross profit dropped to N723.57 million in the first half of 2022, indicating a 22 percent decline from N927 million in the first half of 2021.

Neimeth’s marketing and distribution expenses rose to N437.4 million in the first half of 2022, an 11 percent increase from N394.7 million in the first half of 2021.

Administrative expenses climbed 19 percent to N412.4 million in June 2022 from N346.6 million in June 2021.

Finance cost increased to N121 million in June 2022, a 6.7 percent increase from N113.4 million in the first half of 2021.

Neimeth recorded a negative cash flow in net cash from operating activities to N183.5 million in June 2022 from a positive cash flow of N346 million in September 2021.

Net cash used in investing activities recorded a negative cash flow of N599.7 million in June 2022 from N339.2 million negative cash flow in September 2021.

Net cash from financing activities recorded a positive of N264 million in June 2022 from a negative of N640 million in September 2021.

Cash and cash equivalents dropped 25 percent to N1.5 billion in June 2022 from N2 billion in September 2021.

Neimeth International Pharmaceuticals PLC is a publicly listed pharmaceutical company founded in 1997 and headquartered in Lagos. It was established by a former managing director of Pfizer Products of Nigeria to acquire some of the trading assets of Pfizer International in Nigeria.