BusinessDay 05 Apr 2018

Thursday 05 April 2018
COMPANIES
& MARKETS
Company news analysis and insight
BUSINESS
DAY
13
Savannah Petroleum loses
$27m after Seven Energy
Deal
Pg. 14
Fidson Healthcare’s organic expansion into
new products delivers earnings growth
BALA AUGIE
Fidson Healthcare
Plc’s organic expansion
into new
products category
has delivered sustainable
earnings growth for
the company.
The drug maker continues
to utilize the resources
of its owners in generating
higher profit while contemporaneously
maximizing the
value of shareholders.
For the year ended December
2017, Fidson’s net
margins increased to 7.54
percent from 4.13 percent as
at December 2016.
Net profit margin is the
ratio of net profits to revenues
for a company or business
segment. A higher ratio
means a company has been
able to turn each Naira sales
into higher profit.
Return on equity (ROE)
increased to 14.98 percent
in the period under review
as against 4.79 percent the
previous year.
The Nigerian drug maker
has recorded a profit before
tax (PBT) of N1.58 billion in
full year 2017.
This figure represents a
256 percent increase from
the N443 million that it recorded
in the preceding year,
when the industry faced
huge importation cost as a
result of a lengthy recession,
alongside foreign exchange
volatility which plagued the
sector in 2016 and persisted
through Q1 2017.
The stock price has rallied
some 54.04 percent year
to date, outperforming the
market all share index at 8.53
percent, closing at 5.70 the
previous week.
The company also saw
an increase in revenue of 84
percent from N7.66 million
in 2016 to N14.06 million in
2017, data from its full year
financial statement on the
stock exchange shows.
The firm’s sharp increase
in revenue was a result of
the increase in the firm’s
production capacity due
to the commencement of
operations in its new WHO
compliant ultra-modern
manufacturing.
This has resulted in an
expansion in sales volume of
current production lines as
well as introduction of new
product lines consequently
boosting revenue.
Fidson healthcare Plc.
recently commenced operations
in its brand new WHO
compliant ultra-modern
facility, capable of producing
six distinct product lines
which include; (intravenous
infusions and other sterile
preparations, tablets, capsules,
oral liquids, creams &
ointments and dry powder)
while also growing volumes
in existing production lines.
Another contributing
factor was the recent implementation
of the import
adjustment tax (IAT),
which has enhanced the
competitive edge of local
pharmaceutical producers
compared with imported
products.
IAT is a 20 percent tariff
on four categories of finished
imported pharmaceutical
products which local manufacturing
firms have the
capacity to produce.
The firm like other top
pharmaceutical players suffered
a great challenge on
the back of the lengthy recession
that hammered the
Nigerian economy in 2016,
making the country go into
its first full-year contraction
in 25 years, and thus triggered
acute dollar shortage
that stifled the non-oil sector,
as Africa most populous
nation contracted 0.5
percent to record its worst
performance since 1991.
The sector was fraught
with shortage of naira liquidity
as an increase in government
borrowing at that time
spurred banks to invest in
the safety of sovereign debt
rather than lending to businesses
or consumers, a situation
that drained cash out
of the system, as the sector
witnessed high operating
cost since most of the raw
materials are mainly imported.
However, the economy
managed to limp off the recession
in the second quarter
of 2017 after expanding
0.55 percent, on the back of a
rebound in oil prices, following
an agreement reached
by OPEC members in 2016
to shave some 1.2 mbpd off
the market to nip a growing
supply glut in the bud and
relaxed hostilities in the
Source: Company Financials; BusinessDay Analysis
Niger-Delta.
In addition, the nonsector
recorded a positive
growth for the second consecutive
quarter, spurred
by on-going recovery in the
manufacturing sector due to
improved Foreign Exchange
(FX) liquidity.
Pharmaceutical firms
like Fidson saw a rebound in
profit and economic activities,
which attracted investors’
appetite and interest to
its stocks.
Integrated Oil begins construction of tank farms at $450m Tomaro Industrial Park
AMAKA ANAGOR-EWUZIE
Integrated Oil and Gas,
the promoter of $450
million Tomaro Industrial
Park and Free Trade
Zone (FTZ), has commenced
construction works at the
project site of the FTZ located
at the Tomaro Island in Lagos.
So far, serious construction
is ongoing at the Eastern
side of the industrial
park, where investment in the
building of 30 oil tank bases,
which is going to be strategic
storage and product supply
tank farm, will be located at
the Island.
BusinessDay understands
that out of the proposed 30
tank bases to be built on the
Tomaro Island, two have been
completed; construction
works ongoing on another
four new tank bases while the
surveyor has also started work
on the number seventh and
eight tanks. “The tank farm
project consists of 30 tank
bases with storage capacity of
500 million liters of fuel. Given
the capacity, the Nigerian National
Petroleum Corporation
(NNPC), would be at liberty
to draw fuel for 15 days from
the facility when there is ups
and down in fuel supply in Nigeria,”
Emmanuel Ihenacho,
chairman of Integrated Oil
and Gas, said on Tuesday in
Lagos, when a team of officers
from the Nigeria Customs Service
(NCS) visited the facility
on inspection tour.
According to him, Tomaro
tank farm would be designed
to become the center for tank
farm operation in Nigeria and
the whole of West African
region as products from the
farm can be moved to other
facilities in Apapa, Tin-Can,
Port Harcourt, Warri and even
some countries in West African
region like Ghana, Lome
and others.
“Most tank farms rely on
the arrangement where ships
supply products to the tank
farm and trucks come to pick
products from the farms. But,
because we are located on the
Island and given the function
the farm is designed to do, we
will be supplied by ships and
discharge also by ships. This
means that smaller vessels
and barges would be used
to take the products from
Tomaro tank farms to the
farms located at the ports,”
Ihenacho said.
Ihenacho further said that
the company also intends to
develop the 20,000 barrels per
day modular refinery, which
will also make use of the tanks
as storage facility. “The tanks
we are building are also going
to service the refineries in
terms of storing the refined
petroleum products.
“Tomaro project is actually
making progress and
we have a number of major
investments covering both
the oil and maritime sectors.
Tomaro Island is a project on
its own because is an industrial
zone. This will create job
opportunities for people and
technology transfer for Nigerian
engineers,” he added.
Reacting to this, Tunji
Giwa, chief superintendent
of Customs, who commended
the level of work at the Tomaro
Island, said that as a revenue
generating agency that
Customs visit was basically to
see the level of development
in the Free Trade Zone and
to know the area to partner
with the promoters towards
successful completion of the
project.