Base effects hold back revenue growth

Proshare

Tuesday, 4 August, 2014 4.10 PM / DLM Research

1H2014 sales revenue declines by 2.4% y/y. In the six months period to June 2014 results, Fidson Healthcare recorded revenue of N4.57billion, down by 2.5% compared with N4.69billion in the corresponding period of 2013. Also, the period’s revenue is below our estimate of N5.12billion by 10.7%. On a quarterly basis, the company reported sales revenue of N1.87billion in 2Q2014, i.e. a decline of 30.6% and 9.1% against N2.70billion in 1Q2014 and N2.06billion in 2Q2013 respectively. Moreover, the latest quarter’s revenue is below our estimate of N2.42billion by 22.6% and down by 14.0% compared with the past 8-quarters average of N2.18billion. Consequently, we reviewed downward our estimates for the quarters and years ahead.

Input costs drops marginally by 0.2%… For 1H2014, Fidson Healthcare reported cost of sales (COS) of N2.10billion, down by 0.2% against N2.11billion in 2013. The disproportionate y/y decline in COS relative to revenue resulted in a higher COS/revenue ratio of 46.0% relative to 45.0% in 2013. On a quarterly basis, the company posted COS of N889million in 2Q2014, i.e. a decline of 26.8% and 6.9% compared with N1.21billion and N955million in 1Q2014 and 2Q2013 accordingly.

In addition, our analysis revealed that COS/revenue ratio of 47.4% in the latest quarter is higher than 45.0% and 46.3% in 1Q2014 and 2Q2013 in that order. Therefore, gross profit dipped by 4.2% to N2.47billion compared with N2.11billion in the previous year resulting in decline in gross profit margin to 54.0% relative to 55.0% in 1H2013.

…while higher year-on-year decline in operating expenses improves operating profit margins. Fidson Healthcare’s operating expenses of N1.83billion in the period is lower by 8.2% y/y compared with N1.99billion. The lower y/y decline in operating expenses relative to the y/y decline in revenue resulted in operating expenses/revenue ratio of 40.0% relative to 42.6% in 2013.

Click Here to Download Full Report

Disclaimer/Advice to Readers: 
While the website is checked for accuracy, we are not liable for any incorrect information included. The details of this publication should not be construed as an investment advice by the author/analyst or the publishers/Proshare. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use of this information. All opinions on this page/site constitute the authors best estimate judgement as of this date and are subject to change without notice. Investors should see the content of this page as one of the factors to consider in making their investment decision. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions. This article is published with the consent of Dunn Loren Merrifield, the author(s) for circulation to the online investment community in accordance with the terms of usage. Further enquiries should be directed to the author whose e-mail is Dunn Loren Merrifield Limited [Email:todukoya@dunnlorenmerrifield.com]

READ MORE:
Related News
SCROLL TO TOP