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High finance cost drags Neimeth to N189m loss in Q1

High finance cost drags Neimeth to N189m loss in Q1

Neimeth experienced a loss of N189 million in the first three months of this year due to a significant rise in finance costs, according to findings by BusinessDay.

According to data sourced from the company’s financials, the company’s profit after tax experienced a decline of N189.5 million, an 89.5 percent decrease from the N100 million profit achieved in the same three-month period of 2022.

During the review period, finance costs more than doubled, to N55.3 million compared to the N21.81 million recorded in 2022.

The increase in finance costs can be attributed to the interest expense incurred by the company for borrowed funds. This rise was influenced by the successful increase in interest rates by the Central Bank of Nigeria.

Neimeth also suffered a foreign exchange loss of N17.59 million during the review period, contrasting with a gain of N11.9 million recorded in the same period of 2022.

In the first three months of 2023, Neimeth’s revenue declined to N468.7 million compared to N793.1 million recorded in the corresponding quarter of 2022.

The majority of the revenue, amounting to N438 million, was generated from the sales of pharmaceuticals products, while N30.76 million was attributed to Animal health products in the first quarter of 2022.

Read also: Vitafoam’s profit wilts on high operating expense

Moreover, the cost of sales experienced a decrease to N361.1 million, down from N381.1 million recorded in the same quarter of the previous year.

On the other hand, other income witnessed a significant increase of 374 percent to N30.67 million in the first three months of the current year, as opposed to N6.47 million recorded in the same period of 2022. This rise can be attributed to an increase in leased rental income derived from Neimeth’s property, specifically their former office complex.

During the review period, operating expenses experienced a decrease of 17.3 percent, amounting to N254.9 million, compared to N308.2 million recorded in the same period of 2022.

In the first three months of 2023, there was a loss of N354.8 million in net cash from operating activities, contrasting with a gain of N165.69 million recorded in the same period of the previous year.

Net cash used in investing activities also resulted in a loss, but the amount decreased to N60.69 million in the review period, down from N1.587 billion recorded in the same period of 2022.

However, net cash from financing activities increased to N3.26 billion in the first three months of 2023, compared to N137.68 million used in financing activities in the same quarter of 2022. This increase is primarily attributed to the proceeds generated from the Right issues, which amounted to N3.68 million.

Right issues refer to an invitation to existing shareholders to purchase additional new shares in the company.

As of March 31st, cash and cash equivalents rose to N3.61 billion, with the majority of it held in the bank, with N12 million on hand. This represents an increase from the N448 million recorded in the same period of 2022.