Fidson Healthcare Forecasts N3.44bn PBT, As Rights Issue Closes Next Week

Fidson Healthcare Forecasts N3.44bn PBT, As Rights Issue Closes Next Week


Post Views: 504 About one week to the close of its ongoing rights issue for N3bn, the board and management of Fidson Healthcare Plc, were on the Niger...

At 1.94%, Nigeria’s Economy Records Slower GDP Growth In 2019Q2
NGSE Ranked Among World’s Worst Performing Markets YTD
Mixed Performance Ahead, As Investors Bet On Interim Dividend, 52-week Low Stocks

About one week to the close of its ongoing rights issue for N3bn, the board and management of Fidson Healthcare Plc, were on the Nigerian Stock Exchange (NSE), for its Facts-Behind-the-Figure, where they made a presentation to explain last year’s performance and in a last minute effort to ensure that it records an anticipated full subscription.
As expected, it was also an opportunity for the management to explain the background of the audited financials for the year ended December 31, 2018 and why a dividend of 15 kobo was declared at a time profit took a deep dive and especially given that existing shareholders are being asked to recapitalize the company (READ MORE).
The company is seeking N3bn via and offer by way of rights, 750m shares at N4.00 per share to pay down 60% of some of its expensive loans, as well as fund its working capital needs.
In a presentation, Imokha Ayebae, the company’s head of Finance & Accounts, assured that Fidson Healthcare is projected to earn N20.083bn in sales revenue this financial year (2019), from which profit before tax is targeted at N3.444bn; rising by 2020 to N23.095bn and N3.926bn respectively. By 2023, the management believes revenue will hit N25.125bn and profit, N5.971bn.
Besides the coming on stream of its new factory and increased capacity utilization, Ayebae spoke of a bouquet of cost cutting measures to help achieve the target, such as lowering finance cost with the fresh capital, among others; and increase in product prices. Also on the card, he told the gathering, are plans to reduce energy cost from the current 40% of total by moving from diesel to gas fired power generators, eliminating middlemen and introducing new products.
“We see volume growth being enhanced by the new factory,” he assured, in addition to further improving capacity utilization of its factory beyond the current 80%; just as plans to track what he described as “lost sales” estimated at about N3bn in 2018 and cost of sales.
He blamed the drop in revenue and profit in 2018 to a combination of an increase costs due to scarcity and cost of raw materials, besides the Naira devaluation and Nigeria’s port congestion, all of which has impacted operating costs that could not be passed to consumers, at a time about 95% of raw materials in the country are imported.
As a way out, Fidson plans long-term contracts and direct importation of raw materials to reduce costs by about 30%.
Fielding questions from stockbrokers, Ayebae said the company got N2bn loan from the Bank of Industries (BoI) to inject into working capital, thereby reducing its financing cost from 18 to 13%. With these cost-cutting measures, he said an estimated N1bn is expected to trickle into the bottomline.
On the payment of dividend, despite the drop in 2018 profit, he noted that the directors decided to maintain its records of dividend payment which it started since becoming a listed company. So far, it added, Fidson has paid out N1.8bn as dividend to shareholders, adding that dividend payout policy will be about 30% going forward.
The company’s new factory, which will be of World Health Organisation (WHO) standard, he assured, will be key driver of revenue in the years ahead, engaging also in contract manufacturing for international brands and technical collaborations. The company also hopes to manufacture products for the export market, thereby earning foreign exchange.
Commenting on the 2018 performance, Fidelis Ayebae, managing director/chief executive of the company, said it was natural for investors to feel disappointed and even depressed by the result. He reiterated the fact that it was due to supply chain hiccups which have now been corrected, and will be seen in the first quarter result to be released soon.
Another good thing, he assured is that Fidson has a three-year tax holiday, renewable for another two year, which it has not enjoyed yet, enough period to retain a lot of capital. He appreciated government for its patronage and the regulators for encouraging local manufacturers like Fidson to put in their best.

Photo Caption: Managing Director and chief executive of Fidson Healthcare Plc, Fidelis Ayebae and the company’s Chairman, Segun Adebanji, together sounding the closing gong to symbolically close trading on the Nigerian Stock Exchange (NSE), ahead of the presentation of Facts Behind the company’s ongoing rights issue at the Exchange on Wednesday, April 3, 2019, in Lagos. They are flanked by Fidson Healthcare’s Head, Human Resource, Mrs. Joke Alli; Sales & Marketing Director, Olugenga Olayeye; Chief Executive Officer of the NSE, Oscar Onyema, as well as Fidson’s Head, Finance & Account, Imokha Ayebae.