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May & Baker Q4 turnaround lifts 2019 profit by 84% to N629m

Listed pharmaceutical firm May & Baker Nigeria Plc turned the corner in the fourth quarter of 2019 to push its annual profit after tax up by 84 percent, even though sales in the year disappointed.

May & Baker manufactures and distributes pharmaceutical products, such as vaccines, antibiotics, and sera. The Company also sells diagnostics, medical equipment and bottled water.

Audited financial report of May & Baker published Friday shows the company made a profit of N155.3m in the last three months of 2019 compared to a loss of N72.07m in the same period of 2018.

As a result, total profit for the year almost doubled to N628.9m compared to N342.69m from continuing operations in 2018 ( total comprehensive income in 2018 was N585.2m following the disposal of food business in the year.)

The improvement in bottom-line was, however, not owing to improved sales of the drug and beverage maker; full- year revenue declined by 5.52 percent year-on-year to N8.08bn.

May & Baker noted a decline in its main business segment (the production and sale of human pharmaceuticals and human vaccines) which offset gains from the beverages segment.

The slowdown in revenue weighed on May & Baker’s gross profit which fell by 7.17 percent to N2.94bn notwithstanding a 4.5 percent decline in cost of goods sold.

Consequently, May & Baker made N36.34 from every N100 sales in 2019, slightly lower than N36.99 in the prior year.

“Our drive for ambitious revenue growth appears to have stalled in 2019. This is because we have failed over the years to renew our ageing products portfolio,” said Nnamdi Okafor, Managing Director, May & Baker in his new year address.

Okafor said May & Baker was suffering from lost revenue (about N1.8billion) in the past 18 months from the market withdrawal of some of its old products whilst blaming competition and a weak domestic economy.

Administrative expenses fell almost 25 percent but it was not enough to grow operating income (N1bn vs N1.2bn) as higher selling and general expenses combined with lower ‘other operating income’ worsened the effect of a lower gross profit.

However, May & Baker saw an astronomical increase of over 10,000 percent in interest income on fixed deposits with commercial banks ( N36.98m in 2019).

Profit on disposal of property, plant and equipment rose four-folds to N7m in the period.

Finance cost trended lower by 45 percent to N185.69m.

“We successfully concluded recapitalisation exercise in 2018 through a Rights Issue that injected N1.87 billion into the company helping us pay off expensive short term debts, boost working capital, fund marketing plans and finance equity investment in Biovaccines and a new paracetamol plant,” said Okafor.

May & Baker’s share of loss from Joint Venture cut down significantly to N12.84m in 2019.

This improved profit before tax by 13 percent to N924.8m – around N70m shy of one billion naira.

The jump in net profit in the period boosted earnings per share to 36.45 kobo compared to 34.97.

May & Baker’s subsidiary company Biovaccines Nigeria Limited has re-started operations and plans to commence construction of a planned vaccines production plant in 2020, it said.

The pharmaceutical company in December last year announced a contract manufacturing agreement to produce four brands of French pharmaceuticals Sanofi.

The deal which was signed with Sanofi Nigeria, the local outlet for the global drug company, would see May & Baker use its World Health Organisation (WHO) certified manufacturing facility to produce four products brands of Sanofi for sales in Nigeria and West

African Markets.

The Sanofi brands which May & Baker would be producing locally include “Flagyl tablets and Suspension and Tarivid tablets, anti-infective medicines and Malareich tablets- an antimalaria drug.

“Our Company is therefore now better positioned to launch into the next phase in its evolution which is driving the new vision; To be a leading Healthcare Brand in Sub–saharan Africa,” said Okafor.

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