Industrial & Medical Gases Nigeria Performance Boosts Shareholders Value

Industrial & Medical Gases Nigeria Performance Boosts Shareholders Value

Industrial & Medical Gases Nigeria Plc (IMG) has closed its 2024 financial year on a high note, delivering strong top-line growth, improved profitability, and increased shareholder returns. The audited annual report for the year ended 31st December 2024 paints a picture of a company that is not only expanding its market reach but also optimising operations despite economic headwinds.

IMG’s revenue soared by 38%, rising from N6.06 billion in 2023 to N8.38 billion in 2024. This increase reflects higher demand for the company’s industrial and medical gas products, likely driven by stronger industrial activities and growing healthcare needs in Nigeria.

However, this growth came with increased costs. The cost of sales rose from N3.21 billion to N4.48 billion, a 40% rise, showing the impact of inflation, raw material costs, and energy prices.

Despite rising costs, gross profit improved by 36%, moving from N2.85 billion to N3.89 billion. However, the pace of cost increase nearly matched revenue growth, which means that while the company earned more, margins didn’t expand significantly.

Other income dropped sharply to N32.39 million, compared to N93.40 million in the previous year. This is due to reduced one-off gains with lower non-operational income.

In contrast, foreign exchange gains more than doubled to N1.21 billion, from N502.9 million, likely due to favourable forex movements and exposure to foreign currency earnings.

IMG faced an upward trend in operating costs:

Operating expenses increased by 92%, from N32.1 million to N38.2 million.

Selling and distribution expenses rose modestly to N1.15 billion from N1.09 billion, reflecting increased logistics and distribution efforts.

Credit loss expenses more than doubled to N163.3 million from N68.9 million, suggesting possible challenges in receivables collection and increased provisions.

Administrative expenses jumped by 37% from N978.0 million to N1.34 billion, pointing to rising overheads.

These rising costs may be a red flag if not properly managed in the coming years.

IMG’s finance income dropped significantly from N103.2 million to N16.8 million, due to lower interest returns possibly as a result of cash deployment into operations.

On the flip side, finance costs dropped from N135.1 million to N23.8 million, showing effective debt management and reduced borrowing costs.

Profit before tax (PBT) surged by 96%, from N1.25 billion to N2.44 billion. While Profit after tax (PAT) increased by 90%, reaching N1.62 billion, up from N852.8 million in 2023.

Earnings Per Share (EPS) nearly doubled to 325 kobo, from 171 kobo, underscoring strong returns for shareholders.

IMG declared a final dividend of 80 kobo per share, a significant increase from 10 kobo the previous year — a 700% growth.

In addition, the company rewarded shareholders with a bonus issue of 1 new share for every 10 held, further enhancing shareholder value.

Total assets more than doubled to N14.88 billion, from N7.39 billion in 2023.

Total liabilities also rose significantly, from N3.21 billion to N8.96 billion, due to increased borrowings and working capital funding.

Loans and borrowings stood at N3.92 billion, indicating strategic leverage for growth initiatives.

Other key highlights include:

Retained earnings grew from N3.93 billion to N5.31 billion, showing solid reinvestment of profits.

Total equity rose from N4.18 billion to N5.91 billion, reflecting the strengthened financial position.

Inventories increased to N908.3 million from N673.4 million, to meet growing demand.

Trade and other receivables improved to N1.23 billion, while prepayments rose to N570.5 million.

Cash and cash equivalents, however, dropped to N525.1 million from N2.29 billion, suggesting cash has been reinvested into the business.

Short-term deposits stood strong at N4.63 billion, providing liquidity cushion.

As of year-end 2024, IMG’s stock closed at N34.20. Currently trading at N37.00, the share price has shown moderate upward movement, reflecting investor confidence in view of. the NGX trading activities prior to release of its full-year results. While IMG presents a compelling case for long-term investors.

Investors Recommendation: “BUY”

While rising operating costs should be watched closely, the company’s fundamentals remain strong. The potential for further growth, especially in the healthcare and industrial gas segments, puts IMG in a good position for long-term capital appreciation with forecast of a target price (TP) to medium-term price surge of N42.00 – N45.00.

With improved earnings and dividend payout, the stock appears undervalued relative to its earnings potential.

The Board and Management efforts seeking additional capital raise may further strengthen the company’s balance sheet and fund expansion which mean more returns for shareholders down the line.

Industrial & Medical Gases Nigeria Plc has shown that it can grow revenue, manage operations effectively, and reward shareholders — all in a challenging economic environment. With strategic plans in place and market demand on the rise, IMG is well-positioned for continued success in 2025 and beyond.

PZ Cussons Turnaround Narrative, Recovery Signal a Buy Recommendation