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Fidson Healthcare is a Profit Creator as ROE Hits 9 Year High

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Fidson Healthcare Plc is efficient in generating profit as the return on average equity has hit a nine year-high while the drug maker benefitted from prescription drugs amid the coronavirus pandemic.

For the year ended December 2021, the drug maker’s return on average equity (ROAE) increased to 26.04 percent from 11.95 percent the previous year, according to MoneyCentral calculations.

The ROAE helps investors identify profitable stocks, and Fidson Healthcare has been recording double digit growth in earnings as it survives two recessions in an industry beset by supply chain bottlenecks, inflationary pressures and currency volatility.

Of course, net income surged by 155.3 percent to N3.07 billion as at December 2021 from N1.20 billion the previous year.

It must be noted that profits have been growing since 2018 as revenue was up 68.25 percent to N30.74 billion as at December 2021.

Operating profit grew by 84.79 percent to N5.71 billion in December 2021 from N3.09 billion the previous year. Gross profit was up 74.59 percent to N14.98 billion in the period under review from N14.98 billion in December 2021 from N8.58 billion the previous year.

Fidson Healthcare has been able to translate top line impressive performance into bottom line growth while making profit from its core operations.

Net profit margin increased to 10.02 percent in 2021 from 6.59 percent the previous year. Gross profit margin

The impressive results come amid a tough unpredictable macroeconomic environment that deals a great blow on companies’ margins, and more worrisome is that firms may not find it easy passing on higher costs to consumers in the form of higher prices because consumers are being chucked by huge utility bills and inflationary pressures.

Analysts are optimistic that the drugmaker  will continue with the strong earnings growth momentum in 2021 as it has a lot of projects in the pipeline. They expect these projects to add impetus to revenue and boost investor appetite for the stock.

Fidson Healthcare and peer rival GlaxoSmithKline Consumer Nigeria have commenced the local production of healthcare products from their contract manufacturing partnership signed in 2019.

Recall that in 2019, Fidson signed a contract manufacturing agreement to manufacture five products for GSK Consumer Nigeria Plc.

The production from this partnership which officially commenced on December 16, 2021 aims at enabling the continuous improvement of local manufacturing capability in the Nigerian pharmaceutical industry through technology transfer.

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