Fidson Healthcare Plc – H1 2025

Fidson Healthcare Plc delivered a strong top-line performance in H1 2025, recording a 68% YoY increase in revenue from ₦37.3 billion to ₦62.6 billion. Despite facing macroeconomic challenges including rising finance costs and exchange rate volatility, the company grew its profit after tax by nearly 4x, reaching ₦6.02 billion (vs. ₦1.51 billion in H1 2024), showcasing significant operational leverage.

✅ Strengths

1. Revenue Growth: Revenue increased by 68% YoY, indicating robust demand for pharmaceutical products and improved market penetration.
2. Gross Profit Margin Expansion: Gross profit grew by 70% YoY, from ₦15.1 billion to ₦25.7 billion, maintaining a healthy margin (41%), suggesting effective cost controls in raw materials and production.
3. Improved Operating Profit: Operating profit almost tripled YoY to ₦12.16 billion from ₦4.39 billion, indicating improved scale and operational efficiency.
4. Earnings Explosion: Net profit grew over 298% to ₦6.02 billion, largely driven by core business operations and disciplined expense management despite higher interest and FX costs.
5. Asset Base Growth: Total assets increased to ₦86.1 billion from ₦73.5 billion in Dec 2024, reflecting capital investment in productive capacity and working capital expansion.
6. Equity Strengthening: Retained earnings rose to ₦23.8 billion (up 34%)—a testament to the firm’s reinvestment of profits and value retention for shareholders.

⚠️ Weaknesses & Risks

1. Rising Finance Costs: Finance cost rose by 50% to ₦3.2 billion in H1 2025, eroding some operating gains and signaling pressure from debt-financing.
2. High FX Losses: Net exchange losses stood at ₦2.08 billion (though down from ₦4.39 billion in H1 2024), showing ongoing vulnerability to currency volatility and import exposure.
3. Debt Load Increase: Total interest-bearing borrowings increased sharply to ₦25.8 billion (from ₦16.0 billion in Dec 2024), raising concerns about leverage and interest burden.
4. Cash Drain: Cash and bank balances dropped drastically from ₦4.93 billion to ₦1.02 billion, while overdraft utilization increased significantly—indicating tight liquidity and high working capital intensity.
5. Short-term Obligations Growing: Trade and other payables nearly doubled, and income tax liabilities increased, showing mounting short-term pressures.

🧠 Strategic Insight

Fidson is well-positioned to benefit from the growing healthcare demand in Nigeria, especially with increasing domestic production and import substitution trends. The company is capitalizing on scale, volume growth, and capacity investment, while facing rising debt service and FX risks.

💡 Recommendation: Buy with Caution

We recommend a "Buy with Caution" rating for long-term investors, based on:

• Strong revenue growth and earnings trajectory.
• Improving operating efficiency and margin protection.
• However, rising debt levels and liquidity strain need close monitoring.

Watchpoints include: debt servicing capacity, FX exposure mitigation, and cash flow sustainability. A refinancing strategy or equity raise may help rebalance its capital structure.

📈 Conclusion

Fidson Healthcare Plc is delivering strong operational results amid macro challenges. Its H1 2025 performance confirms solid fundamentals and market resilience. Investors should maintain confidence in the firm’s medium- to long-term growth story, but be alert to liquidity and debt risks in the short run.