Mecure Industries Plc has released its financial results for the year ended December 31, 2024, reporting a pre-tax profit of N3.303 billion. This marks a 10.49% year-on-year (YoY) decline, largely attributed to a sharp increase in finance costs driven by higher borrowing and interest expenses.
Despite the dip in profitability, the company achieved impressive revenue growth of 45%, with total revenue reaching N46.027 billion. This growth was primarily fueled by a 44% surge in sales of acute medicines, which made up over 54% of total revenue.
Key Financial Highlights (2024 vs. 2023)
- Revenue: N46.027 billion (+44.92% YoY)
- Cost of Sales: N31.242 billion (+45.49% YoY)
- Gross Profit: N14.784 billion (+47.75% YoY)
- Marketing Expenses: N2.406 billion (+110.07% YoY)
- Administrative Expenses: N4.323 billion (+39.72% YoY)
- Operating Profit: N8.281 billion (+36.19% YoY)
- Finance Costs: N4.979 billion (+108.24% YoY)
- Profit After Tax: N2.329 billion (-20.05% YoY)
- Earnings Per Share: N0.58 (-20.55% YoY)
- Cash and Cash Equivalents: N398 million (-43.71% YoY)
- Total Assets: N54.838 billion (+31.40% YoY)
- Total Borrowings: N31.057 billion (+60.19% YoY)
- Shareholders’ Funds: N13.959 billion (+14.14% YoY)
Revenue Growth vs. Cost Pressures
While revenue grew by 44.92%, the cost of sales rose even faster at 45.49%, causing a slight decline in the gross profit margin to 32.12% (down 0.81 percentage points). Operating profit increased by 36.19% to N8.281 billion, but rising marketing (+110.07%) and administrative expenses (+39.72%) squeezed profitability. The operating profit margin fell to 17.99%, down from 19% in 2023.
Soaring Finance Costs
Finance costs surged by 108.24% to N4.979 billion, significantly impacting profitability. This increase was driven by:
- Higher Borrowings: Total debt rose by 60.19% to N31.057 billion.
- Increased Interest Expenses: Interest costs jumped by 109% to N4.903 billion, reducing the interest coverage ratio to 1.64 (from 3.22 in 2023).
- Rising Leverage: The gearing ratio increased by 14% to 68.71%, and the equity multiplier rose from 3.41 to 3.93.
Liquidity and Financial Position
Mecure’s liquidity position weakened, with cash and cash equivalents dropping by 43.71% to N398 million. However, the current ratio improved slightly to 1.42 (up from 1.31 in 2023), indicating a stable short-term liquidity position. Total assets grew by 31.40% to N54.838 billion, reflecting ongoing investments and business expansion.
Key Takeaways
- Revenue Growth: Strong 44.92% increase, driven by acute medicines.
- Profitability Decline: Rising finance costs and operating expenses eroded profits.
- Margin Contraction: Operating profit margin fell to 17.99%.
- Liquidity Challenges: Cash reserves dropped sharply, though the current ratio improved.
- Debt Concerns: Higher borrowings and interest expenses raised leverage risks.
Conclusion
Mecure Industries delivered robust revenue growth in 2024, but rising costs and finance expenses weighed heavily on profitability. To ensure long-term financial health, the company must prioritize debt management and cost control while continuing its expansion efforts.