MAY & Baker Nigeria Plc drew on improved cost management and increased margins to sustain growth in profitability in the third quarter as total comprehensive profit grew by 240.65 per cent to N744.33 million.
The nine-month report for the period ended September 30, 2018 submitted to the Nigerian Stock Exchange (NSE) showed that May & Baker Nigeria continued to witness impressive growth in its core pharmahealthcare business, with stronger margins, despite slight decline in revenue and present macroeconomic challenges.
Key underlying profitability ratios showed a more profitable company with pre-tax profit margin almost double at 9.32 per cent in third quarter 2018 as against 4.65 per cent recorded in third quarter 2017. Operating profit margin lent credence to the improving profitability of the core operations of the company rising from 11.13 per cent to 13.65 per cent. Gross profit margin had improved from 31.11 per cent to 36.47 per cent underlining the cost-effectiveness of the top-line strategy.
Gross profit rose by 10.6 per cent from N2.156 billion in third quarter 2017 to N2.385 billion in third quarter 2018. Operating profit also increased by 15.83 per cent from N770.71 million to N892.75 million. With finance cost dropping by 37.25 per cent from N479.60 million in third quarter 2017 to N300.94 million in third quarter 2018, profit before tax jumped by 89.19 per cent to N609.94 million as against N322.39 million recorded in comparable period of 2017.
Profit after tax from continuing operations also leapt by 89.82 per cent from N218.505 million to N414.76 million. With the addition of net profit of N329.57 million from discontinued operation, total net comprehensive income grew by 240.65 per cent to N744.33 million in 2018 as against N218.505 million in 2017. Turnover dropped marginally by 5.63 per cent from N6.93 billion to N6.54 billion.
The company had during the period divested and sold its noodles business as part of its strategic focus on its core healthcare business.
Speaking on the performance of the company, Managing Director, May & Baker Nigeria Plc, Mr Nnamdi Okafor, said the third quarter performance showed that the company’s strategic focus and investments have continued to yield gains for the shareholders.
He said the ongoing rights issue will further help to reduce finance costs, increase capacity and bring greater returns to shareholders, urging shareholders to pick up their rights in order to realise the benefits of their patience and supports for the company over the investment years.
Our results in the past 4 years show we are increasingly becoming healthier stronger, and our performance growth curve is firmly on the upside. The results show the inherent value in our company, and with the investments we had made in recent years and new investments underway, our shareholders can only expect continuing improvement, Okafor said.
He outlined that the net proceeds of the rights issue will be invested in some key projects including N43700 million to finance part of the companys equity in Biovaccines Nigeria Limited, the joint venture company for local vaccine production and over N54100 million on capacity expansion for one of its keycash cow products, paracetamol for which it is building a dedicated plant. The company will also use N400 million to pay down offset part of its current short term debtloan portfolio of about N950 million while N500 million will be invested in marketing and brand building.
He therefore urged shareholders to pick up their rights as the company has bulging opportunities and great new ppotentials that will ensure higher returns to investors.
We derive our confidence mainly from the pedigree, performance track records and strategic plans of the company which we believe put the company on a very solid footing going forward.should appeal to all discerning investors. The new funds will be used to strengthen their investments and make the company more profitable, Okafor said.