May & Baker: When Expansion Boosts Investors’ Confidence | Independent Newspapers Limited
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May & Baker: When Expansion Boosts Investors’ Confidence

Posted: Jun 17, 2015 at 1:09 am   /   by   /   comments (0)

By Bamidele Ogunwusi  –  Lagos


Despite the fact that the pharmaceutical industry in Nigeria is still being seen as a weaker competitor in the economy when compared with her foreign counterparts, some local drug firms have been contributing their quota to the Nigerian economy.

Some of these companies are making strides on the back of the Federal Government’s commitment towards making the sector self-sufficient and improving the overall well-being of Nigerians.

Government’s commitment is being demonstrated through the reinforcing of the National Agency for Food and Drug Administration and Control (NAFDAC). NAFDAC has made concerted efforts at stemming the prevalence of counterfeit and substandard drugs, recording huge successes in the process.

This strategy has also helped reduce the level of corruption within the system and improved the overall quality of products produced internally and externally. For example, the agency had introduced the Mobile Authentication Service, which helps consumer scratch the product upon purchase to determine its authenticity. But experts believe that more needs to be done to totally curb the problem of counterfeiting.

Individual companies must also come up with technological innovations that will help curtail the activities of counterfeiters.

May & Baker Plc is one of the indigenous companies in the pharmaceutical industry that has recorded modest growth. Hence, market sentiments for the shares of the company has remained firm, as it has begun to overcome the challenges associated with building and depreciating its world class pharmaceutical plant by way of increased profitability and revenue growth.

The dividend of five kobo paid to shareholders during the 2014 financial year was also a boost to the company, given the fact that shareholders had no return on their investments for two years due to upgrading of the company’s facilities and the construction of a World Health Organisation (WHO)- certified factory at Ota, Ogun State.

Market watchers believed that the shareholders’ wait for dividend has paid off as they have begun to eat from their collective perseverance.

Stockbrokers also attributed investors’ sustained confidence in the stock to continuing sales; marketing and distribution efforts as well as the company’s strong presence across Nigeria, which has consistently enhanced their bottom-line.

The company’s share price, which closed at N1.65 per share on July 31, 2014, has continued to record appreciable growth among its competitors despite the sell pressure that had pervaded the stock market. At the close of business last Friday, the company’s share price stood at N1.75, an increase of 10 kobo or 6.06 per cent year-to-date.

Results for the financial year 2014 shows that the company recorded a 990 per cent growth in profit. From a pre-tax loss position of N11.4 million in 2013, the group recorded a pre-tax profit of N101.1 million. Similarly, after tax profit rose by 161 per cent from a negative of N103 million in 2013, to a positive of N63 million in 2014. This was achieved on a group turnover of N7 billion, as against N6.3 billion in 2013, representing a growth of 10.2 per cent.

Cost containment and efficient resource utilisation were responsible for the positive signals by way of reduced financing charges, distribution, sales and marketing expenses – all which combined to deliver healthier bottom-line. Key extracts of the audited report and accounts of May& Baker Nigeria for the year ended December 31, 2014, made available by the Nigerian Stock Exchange (NSE), showed a growth of 10.2 per cent in sales for the group.

May & Baker had raised her capacity to produce more products with the construction of the world-class pharmaceutical centre known as the PharmaCentre, located in Ota, Ogun State. The facility has raised the company’s production capacity by over 60 per cent.

The PharmaCentre is a mega investment in the pharmaceutical sector targeted at making Nigeria one of the leading producers of quality medicines in the world. It is one of the few Nigerian pharmaceutical facilities that were recently certified by the WHO on Good Manufacturing Practice (GMP).

Chairman of the company, Gen. Theophilus Danjuma (rtd), addressing shareholders at the Annual General Meetings (AGM) recently, said the company was able to break the trend on non-payment of dividend because of the improvements recorded in the 2014 financial year.

His words: “Despite the harsh operating environment, our company, May&Baker Nigeria Plc, posted an impressive result for the year 2014. The challenges associated with the building and depreciation of Pharmacentre is gradually being taken care of and our company has bounced back to profitability”.

Going forward, Danjuma said that the company’s outlook remains bright and the signs are already manifesting with the return to profitability and dividend payment. “I am optimistic that as soon as soon as we are able to recapitalise the business, we shall take down the high financing cost, which is currently taking substantial earnings off the company. This will put us in a stronger position to fully leverage our installed capacity, aggressively promote our existing brands, launch the new products and businesses in our pipeline and deliver better profits,” he said.