Neimeth Pharmaceuticals Delivers Strong Turnaround in H1 2025 Despite Financing Cost Pressures

Neimeth Pharmaceuticals Delivers Strong Turnaround in H1 2025 Despite Financing Cost Pressures

Neimeth International Pharmaceuticals Plc posted a robust recovery in its half-year 2025 earnings, underpinned by strong revenue growth and operational efficiency, despite the lingering drag of elevated finance costs.

Key Highlights:

• Revenue Surge: Neimeth reported a 76% year-on-year increase in revenue to ₦2.91 billion in H1 2025, up from ₦1.66 billion in H1 2024. Q2 revenue alone rose by 69% to ₦1.70 billion, driven by improved product uptake and market penetration.
• Gross Profit Expansion: Gross profit climbed by 69% YoY to ₦1.58 billion, reflecting effective cost management and higher sales volume. Cost of sales grew by 84%, slower than the revenue expansion rate, indicating improved margins.
• Operating Profit Doubled: Operating profit surged by 115% to ₦1.06 billion from ₦491.6 million, aided by a 220% rise in other income and contained growth in marketing and distribution expenses (+24%).
• Admin Expense Pressure: Administrative expenses ballooned by 710% to ₦498.4 million, reflecting possibly higher wage costs, provisions, or corporate restructuring efforts, which moderated the net benefit of the topline growth.
• Finance Costs a Drag: A notable concern is the 186% spike in finance costs, reaching ₦838.3 million in H1 2025. This significantly diluted the earnings upside and indicates the company’s heavy reliance on debt funding.
• Profit Before Tax (PBT): Despite the higher finance costs, PBT improved 11% YoY to ₦219.6 million, highlighting resilience in core operations.
• Earnings Per Share: EPS came in at 5 kobo, up from 3 kobo in the prior year, indicating steady earnings recovery. However, both basic and diluted EPS reflect modest returns due to finance cost overhang.

Balance Sheet Review:

• Asset Growth: Total assets increased by 3.7% to ₦12.43 billion from ₦11.99 billion as at year-end 2024. This was largely driven by a 77% rise in inventories and a rebound in cash balances to ₦1.80 billion.
• Working Capital Pressure: Trade and other receivables dropped by 37%, while trade payables increased by 12%, suggesting tightened working capital efficiency or delayed collections.
• Debt Profile: Total borrowings (current and non-current) remain high at ₦5.09 billion, posing a significant financial risk, particularly in the face of elevated interest rates.
• Equity Position: Net assets rose to ₦1.87 billion from ₦1.65 billion in December 2024, driven by retained earnings improvement. However, the company still carries accumulated losses of ₦2.64 billion, underlining a long path to full balance sheet repair.

Neimeth Pharmaceuticals is showing clear signs of operational turnaround, backed by top-line strength, gross margin resilience, and rising operating income. However, ballooning finance costs and legacy debt burdens continue to cap profitability and shareholder returns.

Strengths:

• Strong revenue and gross profit growth.
• Rising operating income and EPS recovery.
• Improving net asset position.

Weaknesses:

• Soaring finance costs and heavy debt exposure.
• Sharp rise in administrative costs.
• Accumulated losses still weighing on equity.

Investors should watch closely for Neimeth's efforts to refinance or reduce its debt burden, which remains the major headwind to profitability. If management can sustain revenue growth and execute cost discipline—especially on financing and admin lines—the stock may offer meaningful upside in the medium term.