May & Baker Nigeria Plc rode against the industry and macroeconomic headwinds to sustain appreciable growth in its performance in the first half of this year as the healthcare group continued to benefit from improving cost and operating efficiencies.
Against the general decline in revenue and profitability by most companies that have released their earnings reports, key extracts of the interim report and accounts of May & Baker Nigeria for the six-month period ended June 30, 2016 showed that turnover rose by nine per cent. The group results showed that turnover rose to N3.70 billion in first half of 2016 compared with N3.41 billion in first half 2015.
The company sustained growth in pre and post-tax profits. It reduced its finance cost and distribution, sales and marketing expenses by 10 per cent and 12 per cent respectively. However, cost of sales grew by 16 per cent from N2.25 billion to N2.60 billion due to increases in materials’ costs, devaluation of the Naira and high power cost driven by rampant gas outages. This affected gross profit which reduced from N1.16 billion in first half 2015 to N1.1 billion in first half 2016.
Nigeria’s inflation rate has risen consistently to 16.5 per cent while the devaluation of Naira from N199 to a dollar had pushed the exchange rate above N300 per dollar.
The company continued to benefit from management’s focus on overall operational efficiency. While administrative expenses rose on the back of the jumpy inflation from N263.45 million to N309.48 million, distribution, sales and marketing expenses dropped by 12.4 per cent from N583.20 million to N510.84 million. With these, total operating expenses declined to N820.31 million in first half 2016 as against N846.65 million in first half 2015. Finance costs reduced from N284.38 million to N255.80 million.
With these, profit before tax rose to N44.25 million in first half of 2016, against N43.73 million recorded in comparable period of 2015. Profit after tax also increased from N29.73 million to N30.09 million. Earnings per share thus improved from 3.03 kobo in first half 2015 to 3.07 kobo in first half 2016.
This commendable first-half performance has raised the prospects of good returns in the ongoing business year. The company had increased total dividend payout by 20 per cent to N58.8 million, for the 2015 business year compared to what it paid for 2014 business year.
Managing Director, May & Baker Nigeria Plc, Mr. Nnamdi Okafor, had told shareholders at the 2016 Annual General Meeting (AGM) that management would remain focused on improving the performance of the company in spite of the challenges in the macro economy. He assured that the company will remain focused on its long-term goal of building a virile and diversified business that can ensure good competitive long-term returns to the shareholders.
The increase in sales and bottom-line shows the resilience of the underlying fundamentals of the company and the success of ongoing management’s initiatives aimed at optimizing the synergies from its recent investments.
Also, reviewing the outlook for the company recently, chairman, May & Baker Nigeria Plc, Lt. Gen. Theophilus Danjuma (rtd), told shareholders that the company was set to break new grounds and enhance the value of their investments.
He said May & Baker Nigeria plans to expand into new business areas as it seeks new opportunities that will add value to its performance while sustaining the growth of existing businesses and investments.
According to him, with its existing businesses showing resilience and the continuing operational efficiency of its World Health Organisation (WHO)-certified pharmaceutical complex in Ota, Ogun State, May & Baker is shifting focus to acquire new competences and expand its business into new profitable ventures.
“In the years ahead, our plan is to acquire necessary competences in new business areas and seek opportunities that will add value to our investments. At the same time we shall continue to leverage our installed capacity at the pharmaceutical facility in Ota, energise the food and beverages businesses by promoting existing brands and introducing new ones. May & Baker has a great pedigree but the future is even more alluring as we make new strides and break new grounds,” Danjuma said.