Neimeth faces profitability challenges amid high cost of forex, inflation pressure
Neimeth International Pharmaceuticals Plc has said that the high cost of doing business in the year, especially concerning foreign exchange for the procurement of input materials and other inflationary pressures, adversely affected its profitability.
The Chairman of the Company, Dr. Ambrosie Orjiako, stated this at the 64th Annual General Meeting of Neimeth held in Lagos.
“The company made a gross profit of N1.33 billion in 2022. But the inflationary effects of the operating environment impacted marketing and distribution costs, which went up 30 per cent to N755 million compared to N579 million in 2021, while administrative expenses grew by 52 per cent from N513.9 million to N783 million.
Finance costs increased from N188.2 million to N375 million in 2022. Saddled with these costs, the company wrote a loss after tax of N406 million for the 2022 business year,” he said.
He noted, however, that Neimeth sustained her growth trajectory with a boost to sales revenue for the 2022 business year. The company grew its turnover to N3.649 billion, compared to N3.046 billion in the prior year of 2021.
The shareholders of the company approved a capital raise of N5 billion in 2022, the sum of N3.7 billion through a rights issue, and N1.3 billion through a private placement.
Orjiako noted that during the business year, Neimeth commenced the repayment of two facilities from the Bank of Industry (BOI) and the Central Bank of Nigeria (CBN), which were received in 2020 to fund capital projects still in progress and yet to contribute to income.
Neimeth is undertaking a comprehensive factory upgrade of its Lagos manufacturing plant, which is expected to increase its production capacity by 300 per cent within the next few years, while a pharmaceutical manufacturing facility targeted to meet World Health Organisation (WHO) standard is being constructed at Amawbia, Anambra State. These expansion projects are aimed at boosting revenue and profits.
Orjiako said the projects will not only sustain the upbeat performance of the company but will give it a quantum leap into the league of global healthcare commodities manufacturers.
Acting Managing Director/CEO of Neimeth International Pharmaceuticals Plc,Mr. Gerald Oputa, assured shareholders that the projects will increase the profitability of the company by increasing the cost absorption capacity of plant operations.
“When we can manufacture more, the unit cost of production will come down, and that will lead to higher profits,”he said.
To aid the production expansion projects, the shareholders of the company approved a capital raise of N5 billion in 2022, the sum of N3.7billion through a Rights Issue, and N1.3billion through a private placement.
According to the company, the Rights Issue was concluded towards the end of 2022, and the fund has just been approved by the Securities and Exchange Commission (SEC).
