After a sweltering 2017, leading fast moving consumer goods firm GlaxoSmithKline (GSK) might have a positive turnaround in 2018 as the company gradually swings its pendulum from consumer health goods to pharmaceutical products.
2017 was a tough year for GSK Nigeria; despite an 11.8 percent increase in revenue from N14.3 billion in 2016 to N16 billion in 2017, its gross profits fell by 50 percent from N8.9 billion in 2016 to N4.4 billion in 2017, while Profit after tax fell sharply from N2.3 billion in 2016 to N486 million in 2017. Its gross margin reduced to 0.2 percent in 2017 from 0.6 percent in 2016 while net margin also shrank to 0.03 percent in 2017 compared to 0.3 percent in 2016.
GSK Nigeria has been divesting from its food and drinks segment, having sold Ribena and Lucozade to Japanese maker, Suntory last year. Further investigation also showed in 2017 the pharmaceutical subsidiary contributes 64 percent or N10.3 billion to the total revenue of N16 billion while the consumer healthcare contributes 35.6 percent with N5.7 billion.
In GSK Nigeria, Total assets reduced by 6 percent t0 N26.4 billion in 2017 from N28.1 billion in 2016; however a large junk came from current asset which reduced by 5 percent from N25.4 billion in 2016 to N24.1 billion in 2017.
However further insight into its 2017 total asset showed its consumer health care subsidiary covers over 92 percent of N24.1 billion while its pharmaceutical subsidiary covers just 7.5 percent of N2 billion.
Also in 2017, cost of sales jumped massively by 114 percent from 5.4 billion in 2016 to 11.6 billion in 2017 while materials consumed jumped by 156 percent from 4.4 billion in 2016 to 11.3 billion in 2017.
For 2017 cost of sales of N11.6 billion, the pharmaceuticals subsidiary takes 64 percent or N7.5 billion while consumer healthcare takes 34 percent or N4 billion.
Despite its 2017 loses, GSK investment income rose from 171 million in 2016 to 1.1 billion in 2017. This was driven largely by interest on short-term deposits as Interest rates spiked in 2017 in line with rising inflation and an increase in government borrowing.
This led to the company’s operating segments of consumer healthcare and pharmaceuticals making losses of 701 million and 15.5 million respectively in 2017.
In 2017, the firm Return of Asset (ROA) stood at 2.8 percent, Return on Equity (ROE) stood at 4.4 percent while current ratio and quick ratio stood at 2.6 percent and 1.8 percent respectively.
However in spite of the 2017 struggles, the company has opted to pay a special dividend of ₦7.10 from its retained earnings and ₦0.40 dividend from the retained portion of the pioneer earning balance.
In its Q1 2018 financial statements for the period ended 31st March 2018, the company recorded a revenue growth from N3.8 billion in Q1 2017 to N4.2 billion in Q1 2018.
With a market cap of N22.96 billion, the company has 46.1 percent of its issued share being held by GlaxoSmithKline United Kingdom and the rest by Nigerian shareholders; the principal activities of the company are manufacturing, marketing and distribution of consumer healthcare and pharmaceutical products.
GlaxoSmithKline Plc was formed in 2000 as a result of a merger between Glaxo Wellcome Plc and SmithKline Beecham Plc. It was incorporated in Nigeria on 23rd June, 1971, and commenced business on 1st July, 1972, under the name Beecham Limited. The Company was quoted on the Nigerian Stock Exchange (NSE) in 1977. The shares of the company are currently trading at ₦19 with a one year return of 22.82 percent.
