PHARMA-DEKO'S CURIOUS SALES DROP

Pharma-Deko PLC recorded a rather curious 34.2% drop in core revenue to N744m within the nine months to September this year.

Curious because, the company explained that it was due mainly to nonavailability of products to sell because it's factory and extension were undergoing overhauling.

Yet, figures released for the period show that inventories increased by 30.9% within the period to N437.8m driven partly by 48.5% rise in finished goods to N163.6m. Due to higher prices perhaps and not increased stock?

Any how, it turned out to be too much for Pharma-Deko to handle profitably as cost of sale went down by lower 26.6% to N393.6m and overhead costs virtually refused to ease as much dropping by only 5.26% to N470.1m.

Indeed, the overhead decrease  was due to 28.4% drop in selling and distribution costs to N136.3m as administration expenses rose to N333.8m from N305.8m

Hence, as income from non core sources tumbled by 81.2% to N9.44m, Pharma-Deko reaped N110.3m loss within the period compared to N149.4m profit before tax same time in 2015.

More stressful, perhaps, was the liquidity pressure the company waded through at the same time. Its working capital shrunk to N307.7m from N539.9m.

In a way it could have been avoided if receivables had not been increased to N14.9m from N9.66m and inventories had not mounted.

But that is almost skating around the main pressure point which was due to perhaps unavoidable 50% reduction in commercial paper to N50m and drop in trade payables to N63.9m from N140m.

The real result was that raw cash balance of N690.9m by September 2015 was drained to just N73.7m.

Pharma-Deko, says management, is very hopefully that the tide will turn from October when the factory starts production again. In fact, so hopeful, it declared:

"We are consciously optimistic that once the factory is in full operation by October, we will catch up with the gap in revenue before the end of the year"

PHARMA-DEKO PLC: Nm nine mths
                           2016.          2015
Total revenue 753.44.        1181.6
Core revenue  744.0.          1131.3
Cost of sale    393.6.           536.0
Selling etc      136.3.           190.4
Administration 333.8.         305.8
Other income     9.44.           50.3
Profit before tax (110.3).     149.4
Profit margin %   (14.6).         12.6
Working capital 307.7.         539.9
Short term loan.  50.0          100.0
Inventories.         437.8.        334.5
Receivables.         14.9.          9.66
Payables.              63.9.         140.0
Prepayment.       205.8.         217.3
Cash.                    73.7.          690.9

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