One of the largest consumer goods and healthcare firms in Nigeria will pay a juicy bonus to its shareholders.
GlaxoSmithKline Nigeria Plc will distribute a N8.52 billion special dividend in 2017, according to information it posted on the website of the Nigerian Stock Exchange (NSE)
The payout came on top of N480 million in regular dividends for 2017, equal to all of the company’s profit.
The company said the windfall will be paid from retained earnings brought forward and profits of the sale of drinks segment as at December 2016.
A breakdown of GlaxoSmithKline’s financial statement showed the company realised N21 billion from the sale of the drink business, which translated into a profit after tax and special dividend of N3.23 billion after deducting expenses relating to the deal.
Analysts say investors have been scrambling to buy the firm’s stock on the expectation in share price appreciation.
Dividend yield (DY) has catapulted to around 30 percent on a share price of N25.50 (2:00pm close of trading on Friday) immediately after the announcement as investors expect a high minimum required rate of return.
While the Nigerian consumer goods and healthcare firm is rewarding shareholders with a bumper dividend, its earnings have missed analysts’ expectations as rising cost of production suppressed margins.
Net income dipped by 45.02 percent to N486.43 million in December 2017 from N4.20 billion the previous year.
A 156.81 percent surge in cost of raw material consumed dealt a great blow on margins as gross margins dipped to 27.79 percent in December 2017 from 62.30 percent as at December 2016.
Net margin, a measure of efficiency, fell to 3.02 percent in December from 29.20 percent the previous year. This means the company has not been translate each Naira of sales into profit for shareholders.
GlaxoSmithKline’s shares have gained 18 percent since last year, outperforming the NSE ASI of 8.44 percent as of close of trading on Friday.
BALA AUGIE
