June 22, 2009

GlaxoSmithKline first quarter turnover up by 30%

The unaudited first quar ter  result of GlaxoSmithKline Consumer Nigeria Plc (GlaxoSmith) for the period ended 31 March, 2009 showed that its turnover  grew by 30.53% to N3.87bn, compared with N2.97billion  in the corresponding period of 2008.

Profit Before Tax (PBT) increased by 47.09% between 2008 and 2009 to N865.3million from N588.3million in the corresponding period of 2008. The tax provision moved in a similar direction, increasing by 47.1% between 2008 and 2009 to N271.3million  from N182.4million  bringing the Profit After Tax (PAT) to N593.9mn as against N405.9mn in 2008, representing a growth of 46.3%.

Meanwhile, GlaxoSmithkline(UK) recently stepped up its expansion into Africa and emerging markets, striking an alliance to sell more than 100 drugs of Dr. Reddy’s, the Indian generic pharmaceuticals maker. Analysts are of the opinion that this alliance will contribute positively to the revenue growth of GlaxoSmith Nigeria.

A cursory look at the company’s profit margins according to a research by FSDH Securities Limited reveals an increase in the PBT margin in first quarter 2009 over first quarter 2008 and over the full year 2008 figure. The PBT margin increased to 22.34% in first quarter 2009 from 19.82% as at first quarter 2008 and up from 14.75% as at the end of the financial year in December, 2008.

This shows that the company’s total cost as a percentage of turnover stand at 77.66%, down from 80.18% recorded in the corresponding period of 2008.This analysis shows that GlaxoSmithKline  is becoming more efficient in its cost management strategies.

PAT Margin currently stands at 15.33%, up from 13.68% in the corresponding period of 2008 and up from 10.18% as at full year 2008.The result also indicated that the percentage of the turnover , PBT, and PAT in the first quarter 2009  result to the full year audited turnover  PBT and PAT for the period ended December, 2008 are: 30.88%, 46.75% and 46.51%, respectively. This suggests that GlaxoSmith should surpass its previous year’s performance at the current run rate.

Fathermore, FSDH Securities revealed that the audited account of GlaxoSmith for the period ended December, 2008 showed that its working capital position improved in 2008. Its working capital improved to N2.33billion from N1.87billion in 2007, representing a growth of 24.39%.

Turnover  increased in 2008 over 2007 by 26.52% to N12.55billion , while the cost of sales increased by 18.80% to N7.18billion. A lower increase recorded in cost of sales compared to the increase in turnover led to an increase in Gross Profit (GP) of 38.57% to N5.37billion from N3.87billion, and an increase in the gross profit margin from 39.07% in 2007 to 42.79% in 2008.

Trading profit increased by 57.49% in 2007 to N1.79billion from N1.13billion in 2007. PAT also increased by 52.64% to N1.28billion  from N836.9million. Capital employed increased in 2008 by 16.74% to N6.29billion from N5.39billion  in 2007, while the shareholders’ funds increased by 18.46% to N5.45billion over the previous year’s figure of N4.6billion . The Return on Capital Employed (ROCE) and Return on Equity (ROE) stood at 29.45% and 23.43% respectively in 2008.