May & Baker Nigeria Plc, a pharmaceutical manufacturing company in Nigeria has recorded an 83 per cent decline in its after-tax profit to N1.08 billion in 2023 from N1.5 billion in the previous year.
The firm stated that its after-tax profit declined as a result of the rising cost of imported raw materials and specialised products in 2023.
“The group’s exposure to the risk of changes in foreign exchange rates is minimal as the group’s borrowing activities are in local currency and trade customers are billed in Naira. However, exposure to foreign exchange risk only relates to purchasing operating materials abroad. It is minimised by restricting imports to the circumstance where no local alternative exists,” the statement said.
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Further analysis shows that the group’s pre-tax profit also declined by 26.9 per cent to N1.52 billion from N2.1 billion in 2022. However, on the level of non-current assets incurred by the company on property, plants, and equipment, the manufacturer recorded an increase to N5.4 billion from N5 billion in 2022.
Its revenue grew by 37 per cent to N19.7 billion from N14.3 billion on the back of high demands from external customers at different locations in Nigeria.
“Our business is healthcare and pharmaceutical manufacturing which puts us in a position of opportunity to bring out relevant quality products that people can use to manage diseases,” the statement said.
It added that the company’s strong supplier relationships provide extended credit (60-90 days) on imports, easing the strain of foreign exchange acquisition.
May & Baker’s cost of sales rose to N13.1 billion from N10.5 billion in 2022. Distribution, sales, and marketing expenses grew to N2.6 billion from N2.1 billion while administrative expenses rose by 119.2 per cent to N2.7 billion from N1.2 billion driven by the cost of inventories.
Inventories are the raw materials used in the production of goods for sale. In a year, May & Baker recorded a 22.6 per cent increase in inventories to N6.5 billion from N5.3 billion in the previous year.
“Over the last years, the business has maintained good profitability indices and we believe we can maintain the trend. We are working at reducing the cost of products through investments in backward integration along our supply chain,” the statement said.
The company acknowledged actively managing overhead and administrative expenses to offset the rising costs while capitalizing on lower financing rates through CBN Intervention funds.
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The company’s gross profit more than doubled to N6.6 billion from N3.8 billion. Interest income increased to 383.5 million from N231.5 million while finance costs grew to N290.4 million from N286 million in a year.
“Investment on joint ventures slightly increased to N1.2 billion from N1.14 billion while intangible assets declined to N7.3 million from N11.3 million which made up a total of N6.6 billion non-current assets in a year,” the statement added.
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