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Neimeth’s new CEO faces task to offset revenue challenges after N139m loss

…stock records biggest daily loss in more than three (3) months

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A reoccurrence of 2015 spray of losses may just be imminent for Neimeth International Pharmaceuticals Plc if its newly appointed Chief Executive Officer (CEO), Pharm. Matthew Azoji, fails to tackle the company’s revenue challenges on his assumption of office come Feb. 1.

Azoji holds a first-class honours degree in Pharmacy from Obafemi Awolowo University (OAU), an MBA (Marketing) from the Enugu State University of Science and Technology and an Advanced Management Programme (AMP) from the Lagos Business School; Pan Atlantic University, Lagos.

Besides, he obtained certificates in Pharmaceutical Policy & Pharmacoeconomics from Utrecht University in the Netherlands (a WHO Collaborating centre) and went on to get his M.Sc. in Public health from the University of London, International Programmes. He obtained his M.Phil in Pharmacy Administration from OAU and he currently runs a Ph.D. programme in Clinical Pharmacy and Pharmacy Practice from the University of Jos.

But what appears to be of topmost priority to the company is having it bounced back from its losses as that would go a long way in boosting investor confidence which is gradually waning.

The amount Neimeth generated from the sale of goods and services to customers fell significantly despite the company spending more to market and distribute its products, slipping the drug manufacturer back into losses which it recently emerged from.

The company had recorded losses of N64.2 million and N152.1 million in the last two quarters of 2017 before stepping into the path of profitability which saw it recording four unbroken quarters of gains in 2018 financial year.

Results for the first quarter (Q1) of 2019 financial year ending December 2018 filed at the Nigerian Stock Exchange (NSE) Tuesday by the pharmaceutical company reveal that Neimeth’s revenue was down some 42.4 percent to N227.07 million, its lowest quarterly turnover in 2 years, from N394.3 million, recorded a year earlier.

BusinessDay analysis shows that the revenue shortfall, which largely eroded the company’s profits in the review period, is its biggest since Q1 2017 and was triggered by the decline in the company’s revenue from pharmaceuticals.

This greatly pushed the firm’s gross profit down by 72.6 percent, causing its gross margin to wane considerably to 23.6 percent from 43.6 percent in the previous year.

Due to the revenue shortage and over 27 percent increase in marketing and distribution expenses, Neimeth posted an operating loss for the review period, amounting to N119.3 million from an operating profit of N29.96 million, this is in spite of cutting administrative spending slightly by 9.4 percent to N93.45 million.

The company recorded losses of N139.16 million within the last three months of 2018 down from N13.55 profits achieved in the corresponding period of 2017.

The appointment of Azoji, who holds a first-class honours degree in Pharmacy from Obafemi Awolowo University, was contained in a separate notice sent to the NSE.

Shortly after the disclosure of the company’s Q1 financials and notification of Azoji’s appointment, shares of Neimeth plummeted to 63 kobo after losing the daily maximum decrease of 10 percent to emerge the biggest loser alongside Academy Press Plc at the sound of the closing gong at the Lagos bourse Tuesday.

The drop in Neimeth’s market value is its biggest daily loss since October 22, 2018, indicating investors’ reaction to the poor performance which resurfaced in the review quarter after a year.

Over 2.65 million units of the stock valued at N1.74 billion were traded in 50 deals on Tuesday, this represents about 199 percent and 178 percent leap from 886,380 units worth N626,250 traded in the previous session respectively.

Neimeth International Pharmaceuticals is a Lagos-based company founded in 1997. The firm focuses on manufacturing and marketing of pharmaceuticals, animal health products, and general healthcare products. It was incorporated on August 30, 1957, as a limited liability company and listed on the NSE on September 21, 1979.

 

OLUWASEGUN OLAKOYENIKAN 

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