GlaxoSmithKline sells Ribena, Lucozade to Suntory

GlaxoSmithKline sells Ribena, Lucozade to Suntory
Oladejo Amos
GlaxoSmithKline Consumer Nigeria has agreed to sell its Ribena and Lucozade business to Suntory Beverage and Food Limited.
The drug manufacturer’s profit before tax fell 58 per cent to N1.157 billion in 2015, from N2.752 billion recorded a year ago.
Similarly, profit after tax dipped 47.8 per cent to N965.05 million from N1.848 billion declared in the same period of 2014.
Revenue of GlaxoSmithKline inched up from N30.52 billion in 2014 end to N30.63 in the review period of 2015, representing a slight increase of 0.37 per cent.
The company, which holds its Annual General Meeting June, proposes a dividend of 30 kobo per share to its investors, compared to 75 kobo per share dividend and one (1) new share for every four  existing shares to investors of the company paid in 2014.
The proposed 30 kobo per share dividend is a 60 percent cut in dividend payment to shareholders of the company compared to 75 kobo per share paid in 2014 end.
Analysts at FSDH Merchant Bank said that the consumer healthcare segment of the company was negatively impacted by stiff competition and weak consumer purchasing power.
They noted that the decline in the GSK Nigeria’s profit indicates the challenges faced by the company as a result of the difficult operating environment
“The company will continue to focus on its route-to-market and brand activation strategy in order to drive penetration and to improve market share.
 “A combination of economic and industry related factors have resulted in marginal growth in GSK Nigeria in the last four years. We have not identified a clear strategy that GSK Nigeria will adopt to reinvent its business in the medium-term,” they said.
The analysts forecast shows that the company will grow its revenue at a rate lower than the inflation rate in the medium term and estimate a dividend per share of N0.25 for the 2016 financial year (excluding the special dividend of N0.60).
“Our fair value of the shares of GSK Nigeria is N12.95. We place a sell on the shares at the current market price of N20 per share,” they added.