May & Baker Nigeria Plc crossed a landmark to a pre-tax profit of N1 billion in the third quarter as improving sales and internal cost management lifted the company’s pre-tax profit by 44 per cent.
Key extracts of the interim report and accounts of May & Baker Nigeria Plc for the nine-month period ended September 30, 2020 released at Nigerian Stock Exchange (NSE) showed considerable growths in profitability as well as balance sheet.
Managing Director, May & Baker Nigeria Plc, Mr. Nnamdi Okafor, said the third quarter results showed the resilience of the business strategy of the group in spite of the uncertainties and decline occasioned by COVID-19 pandemic.
Despite the lockdowns and disruptions caused by COVID-19 pandemic and other macroeconomic headwinds, total sales rose by 8.8 per cent to N6.44 billion in third quarter 2020 as against N5.92 billion recorded in third quarter 2019. While cost of sales dropped marginally from N3.75 billion to N3.74 billion, gross profit rose by 24.7 per cent from N2.16 billion to N2.70 billion.
Profit before tax jumped by 44 per cent to cross the billion naira mark to N1.003 billion in third quarter 2020 as against N696.4 million in third quarter 2019. After taxes, net profit also grew by 43.9 per cent from N473.60 million to N681.70 million. Basic earnings per share expectedly rose by 44 per cent from 27.45 kobo in third quarter 2019 to 39.52 kobo in third quarter 2020.
Underlying profitability ratios also showed a general improvement in the profitability of the company and value creation for investors. Gross profit margin rose by more than five percentage points to 41.9 per cent in third quarter 2020 as against 36.6 per cent in third quarter 2019. Pre-tax profit margin also rose from 11.8 per cent to 15.6 per cent.
Return on equity increased from 8.5 per cent to 11.1 per cent while return on total assets stood at 7.2 per cent as against 7.3 per cent. Total assets had grown by 44.9 per cent from N9.58 billion in third quarter 2019 to N13.88 billion in third quarter 2020. While the company’s paid up share capital remained unchanged at N862.62 million, shareholders’ funds rose by 10.2 per cent to N6.12 billion in third quarter 2020 as against N5.56 billion in third quarter 2019.
Okafor said continuing growth in sales underscored the increasing market shares of many key products and the success of the company’s marketing and distribution strategies.
According to him, the company’s investments in research, operations and production have put it in strong position to maintain leadership in the primary Nigerian market and to consolidate its expansion across neighbouring countries in line with its vision of being the dominant pharmaceutical brand in Sub Saharan Africa (SSA).
“We are delighted with the performance so far this year, and we are hopeful to sustain this. Given the general difficulties and uncertainties in the operating environment, our results are encouraging. Our shareholders are seeing the results of our perseverance,” Okafor said.
He said the company has continued its quest to diversify income sources and broaden its operations base by optimizing its World Health Organisation (WHO)-certified pharmaceutical manufacturing complex through domestic and global partnerships as well as contract manufacturing.
He assured shareholders that the company is on a strong footing to sustain good returns on their investments.
May & Baker Nigeria had distributed a total of N431.31 million as cash dividends to shareholders for the 2019 business year. This represented 25 per cent increase in dividend payout, after the company’s net profit rose by 109 per cent to N716.4 million in 2019. Shareholders received a dividend per share of 25 kobo, an increase of 25 per cent on 20 kobo per share paid for the 2018 business year.
