May & Baker Outlines Strategic Plan to Sustain Growth

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 By Eromosele Abiodun

May & Baker Nigeria Plc plans to expand into new business areas as it seeks new opportunities that will add value to its performance while sustaining the growth of existing businesses and investments.

Chairman, May & Baker Nigeria Plc, Lt. Gen. Theophilus Danjuma (rtd), disclosed this at the company’s annual general meeting (AGM) held in Lagos.

Danjuma told shareholders that the company was set to break new grounds and enhance the value of their investments.

According to him, with its existing businesses showing resilience and the continuing operational efficiency of its World Health Organisation (WHO)-certified pharmaceutical complex in Ota, Ogun State, May & Baker is shifting focus to acquire new competences and expand its business into new profitable ventures.

“In the years ahead, our plan is to acquire necessary competences in new business areas and seek opportunities that will add value to our investments. At the same time we shall continue to leverage our installed capacity at the pharmaceutical facility in Ota, energise the food and beverages businesses by promoting existing brands and introducing new ones.  May & Baker has a great pedigree but the future is even more alluring as we make new strides and break new grounds,” Danjuma said.

He explained that the company had delayed its capital raising in order not only to extract the greatest value for the existing shareholders that had toiled to build the company but also to ensure that new equity investments are in line with the strategic vision of future expansion and technical competences. The company had in 2014 empowered the company to raise N3.2 billion new equity capital.

But the chairman said the board had, in the interest of all the shareholders, decided not just to go for financial investments, but more importantly to look for investors that can, in addition, offer technology that will help the company to better leverage its Pharmacentre investment.

“This way we shall secure both funding and technology competencies to delve into new areas,” Danjuma said.

He said the company has restarted discussions with the President Muhammadu Buhari government on the joint venture business for local vaccine production and the signals from the discussions indicate that government is positive on the local production and the revised joint venture agreement will soon be ratified by the Federal Executive Council.

“We have absolute confidence in this project and that explains why we have not given up on it through these many years of delay. The need to produce vaccine in Nigeria has become even more imperative because the major foreign donor agency for vaccine, Global Alliance for Vaccines and Immunisations (GAVI) has indicated its desire to withdraw sponsorship by 2022. This leaves local vaccine production as the only sustainable avenue to keep our population secure from immunisable diseases,” Danjuma said.

He noted that the performance of the company in 2015, in spite of the challenges in the economy, showed that it has continued to be resilient and focused on creating values for shareholders.

Analysis of its audited financial statement showed that sales grew by 7.8 per cent while increased cost efficiency and internal control boosted pre-tax profit by 41 per cent.  Turnover rose from N7.02 billion in 2014 to N7.57 billion in 2015. Operating expenses reduced by 11 per cent, while distribution, sales and marketing expenses remained flat at 2014 level.   Administrative expenses also reduced by 8.4 per cent from N641.33 million in 2014 to N587.3 million in 2015. Finance charges which has remained a major headache of the company is gradually also being contained. Cost of funding the business was thus reduced by 2.6 per cent from N603.87 million in 2014 to N588.18 in 2015. With this level of operational efficiency, profit before tax grew from N101.2 million in 2014 to N142.4 million in 2015. However, due to significant increase in  total tax burden to N74 million,  the  growth in after tax profit  was slowed to 7.41 per cent,  from N63.34 million in 2014  to N68.03 million in 2015.

“This performance improvement is quite significant considering that many companies in this economy recorded negative topline and bottom-line growth in 2015. We give kudos to the management who effectively managed adverse environmental factors to achieve a better result,” Danjuma said.

He said the 20 per cent increase in dividend payout to N58.8 million for the 2015 business year is in line with the board’s commitment to keep rewarding shareholders for their understanding during the years of investment in the WHO-certified factory.