‘421 per cent tax hike erodes net profit’, says May & Baker

May & Baker Plc has stated that an increase in tax by 420.5 per cent has reduced a 143 per cent growth in its profit before tax, resulting to a net loss in the 2016 financial year.

According to the company, the highlights of its audited report and account for the year ended December 31, 2016 submitted to the Nigerian Stock Exchange (NSE) showed that the healthcare group recorded steady growths across key fundamentals, except profit after tax (PAT).

Specifically, the firm’s Profit before tax rose by 142.9 per cent from N142.40 million in 2015 to N345.94 million in 2016. However, taxation surged by 420.5 per cent from N74.36 million in 2015 to N387.03 million in 2016.

This, according to the company, displaced the net profit of N68.03 million in 2015 with net loss ofN41.09 million. It explained further that the huge tax expense resulted from a cumulative of back duty tax of N128 million, deferred tax charge of N208 million and current tax of N51 million.

While sales rose by 12 per cent, improved operating efficiency resulted in the average profit-making capacity of the group on every unit of sale with pre-tax profit margin doubling from 1.88 per cent in 2015 to 4.09 percent in 2016. Operating profit margin improved from 8.67 per cent in 2015 to 9.69 percent.

The directors of the company are recommending distribution of N58.8 million as cash dividend for the 2016 business year. Shareholders will receive a dividend per share of 6.0 kobo, if approved by shareholders at the firm’s yearly general meeting.

The Managing Director, of the company, Nnamdi Okafor, said the group has continued to demonstrate resilience notwithstanding the tough macroeconomic environment that had constrained access to raw and production materials as well as poor purchasing power of consumers.

According to him, in spite of the macroeconomic challenges, the company’s sales growth has been above industry average while the management has maintained efficient cost control to mitigate the effect of the macroeconomic headwinds on the bottom-line. He said this performance is driven by innovation, creativity and prudence.

He pointed out that while the company’s world-class manufacturing facility in Ota, Ogun State , is growing into a hub of pharmaceutical manufacturing in West Africa, the foreign exchange crisis that bedevilled the Nigerian economy in 2016 constrained access to raw materials and forced the group to operate the facility at about 50 per cent of its installed capacity.

He assured that as the foreign exchange constraint and other macroeconomic challenges ease off and the economy regains its positive growth, the company would ramp up production capacity while sustaining its cost management.

He added that the group plans to keep growing its drug manufacturing and distribution business by stronger double digit numbers in the coming years, adding that May & Baker is consistently keeping abreast of international best practice and making strategic plans that can take its businesses to the next levels.

“We are already looking ahead for better results in 2017 and beyond. By the grace of God and with the support of all, we shall accomplish our objectives not only to remain the leader in our market segments but also to create more wealth and value for all our stakeholders,”