Fidson foresees imminent recovery despite 35% drop in half year revenue 

Fidson Healthcare Plc has reiterated its confidence in delivering better performance in the second half of the year as well as growth in the near future, focusing on its strategies for market expansion and brand building.

The company stated this position in view of the release of its half year 2016 financial results to the Nigerian Stock Exchange this week. Fidson recorded a 35 per cent dip in revenue from N4.03 billion in half year 2015 to N2.61 billion in half year 2016 with profit after tax also declining to N39.5 million from N324.2 million during the same period. This performance is in spite of the significant drop in the company’s operating cost.

According to the company, the low sales figure recorded is as a result of unavailability of products, a direct consequence of the scarcity of foreign exchange that beleaguered many in the manufacturing sector, which led to it only accessing a fraction of its fx needs in the first 6 months of the year. The paucity of foreign exchange, for the importation of key products and essential raw materials for manufacturing were disruptive to manufacturers in the pharmaceutical industry including Fidson. Gross margins dropped to 52 per cent on turnover from 55 per cent in the same period last year, this is a reflection of the direct impact of significant increase in the exchange rate.

The company’s cost optimisation strategy, which it embarked on a couple of years ago, continued in 2016 in line with its strategy to drive efficiency in the face of a challenging business environment. This strategy saw Fidson reduce its operating cost by over 60 per cent in the period under review. The company has indicated that it will continue to drive efficiency into its processes, which will continue to result in savings on admin expenses.

Fidson is optimistic that products will be available to sell given the recent CBN reforms in the fx market. Its growth strategies are premised on the recent move to the company’s new World Health Organisation Good Manufacturing Practice (WHO-GMP), where local production recently commenced.

The newly completed state-of-the-art facility will provide several benefits including increased capacity, improved efficiency from economies of scale, increased product offerings as well as job creation with an additional 300 jobs expected to be created.

Aside from increasing production capacity, the new factory would enhance the company’s business prospects by enhancing its ability to tender for WHO sponsored programmes, which Nigerian pharmaceutical manufacturers are unable to access, losing out to foreign companies in these tenders.