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By Chinwendu Obienyi
To aid the production expansion projects, shareholders of Neimeth Pharmaceuticals, yesterday, approved a hybrid capital raise for N5 billion, the sum of N3.7 billion through a Rights Issue while N1.3 billion will be raised through private placement.
The Rights Issue was successfully concluded towards the end of 2022 and the fund has just been approved by the Securities and Exchange Commission (SEC). According to the company, this will further facilitate the expansion projects of the company from 2023 for greater productivity, higher revenue, and profits.
This was even as the shareholders expressed faith in the ability of the company to grow their investments despite Nigeria’s challenging business operating environment.
Addressing shareholders at its 64th Annual General Meeting (AGM), the Chairman of the company, Dr. Ambrosie Orjiako announced a 20 per cent growth in the turnover of Neimeth for the 2022 business year.
He said 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.
However, the high cost of doing business in the year, especially with regard to foreign exchange for the procurement of input materials and other inflationary pressures adversely affected profitability.
Also speaking, the Acting Chief Executive Officer, Neimeth, Gerald Oputa, assured the shareholders that the projects will increase the profitability of the company by increasing the cost absorption capacity of plant operations.
“When we are able to manufacture more, the unit cost of production will come down and that will lead to higher profits”, Oputa said.
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 cost 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.
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 World Class pharmaceutical manufacturing facility targeted to meet World Health Organisation (WHO) standards 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.
