GLAXOSMITHKLINE Consumer Nigeria Plc has reported 18.14 percent growth in its Profit before Tax (PBT) for its 2023 second-quarter results, reaching N274 million.
Subsequently, the half-year PBT declined to N504 million from N518 million reported in the same period last year.
According to the financial results submitted to the Nigerian Exchange Limited (NGX), the revenue of GSK Nigeria dipped by 49.92 percent Year-on-Year (YoY) in Q2 2023 to N3.732 billion.
Despite the challenging environment evidenced by the drop in revenue, the company succeeded in expanding its profits. This positive outcome was primarily driven by the decline in operational costs and an increase in finance income.
Cost of sales dipped by 57.32 percent for the period under review to N2.412 billion as the Gross profit dipped by 26.43 percent to N1.314 billion.
Administrative expenses also went up by 9.66 percent to N497 million, while selling and distribution expenses dipped by 36.92 percent to N693 million.
Nevertheless, the company realised a finance income of N192 million, mainly originating from interest gains on short-term investments, contributing significantly to the enhancement of the bottom-line performance.
Bowing to prevailing macroeconomic challenges, GSK Nigeria, a marketing and distributor of consumer healthcare and pharmaceutical products, has disclosed the intention of its parent company, GSK UK Group, to cease commercialisation of its prescription medicines and vaccines in Nigeria through the GSK local operating companies and transition to a third-party direct distribution model for its pharmaceutical products.
The company would consequently be delisted from the Nigerian Exchange Limited as GSK Nigeria ceases operation. Its products will have to be channelled through alternative distributors in Nigeria due to supply chain constraints and recent policy decisions that altered the business operating environment.
The company’s fundamentals suggest that its sales and profitability growths in recent years have been import-dependent and unpredictable, subjecting it to supply chain shortages, foreign exchange losses and the impact of COVID-19.
Analysts believe that the GSK incident indicates Nigeria’s progressively difficult business environment. Rising domestic costs and a falling naira have whipsawed profit and put the company in a business sustainability challenge.
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