Economy
GCR Downgrades Mecure Industries Ratings With Negative Outlook
By Dipo Olowookere
The outlook of a company listed on the Nigerian Exchange (NGX) Limited, MeCure Industries Plc, has been lowered to negative from positive by GCR Ratings.
The rating firm also downgraded the Mecure Industries’ national scale long-term and short-term issuer ratings to BBB(NG) and A3(NG) from BBB+(NG) and A2(NG), respectively.
In the same vein, the long-term issue rating of Mecure Industries Funding SPV’s N3 billion Series 1 Senior Secured Bond has been demoted to BBB(NG)(EL) from BBB+(NG)(EL).
In a statement sighted by Business Post, GCR explained that the negative outlook on Mecure Industries “reflects our expectation that the ratings could face further downward pressure if operating cash flows (OCF) remains negative from intense working capital absorption, and liquidity coverage stays below 1x due to increased reliance on short-term debt funding, especially if the proposed equity raise does not materialise or meet expectations.”
It was noted that the use of high short-term debt to finance expanded working capital requirements has weakened the liquidity profile of the company, with rising finance costs and the elevated operational needs.
GCR said it adjusted Mecure Industries’ liquidity profile to reflect the persistently weak coverage resulting from elevated working capital financing, with short-term debt rising to N28.3 billion against a low cash balance of N1.5 billion as of the first quarter of 2025.
Despite factoring in projected improvements in OCF of about N5.8 billion, a portion of inventory holdings (haircut at 40 per cent), and committed revolving credit facilities amounting to N8.9 billion as of May 2025, the uses versus sources liquidity metric remained below 1.0x over a nine to 21 months period.
However, it was noted that capital investment is expected to remain modest over the medium term considering the recent completion of production plant renovations and expansion.
It was stated that plans by the healthcare firm to raise N30 billion from an initial public offering in 2026, aimed at improving the capital structure, should cut down the high near-maturing debt and support working capital funding.
The company’s business profile remains a positive rating factor because of its diversified portfolio of over 140 product offerings across nine therapeutic classes, with a strategic focus on the margin-enhancing ethical medicine segment.
Its competitive position is further underpinned by its nationwide network of about 100 distributors, as well as long-standing relationships with suppliers and foreign technical partners, which facilitates supply chain security, product development, and modern manufacturing practices.
Bolstered by expanding scale, Mecure Industries aims to increase market penetration through new product introductions, competitive pricing strategy, contract manufacturing arrangements, and growing export activity, which are expected to strengthen its competitive stance over the review period.
In the 2024 fiscal year, Mecure Industries grew its earnings by 44.9 per cent to N46.0 billion due to volume growth, inflation-driven price adjustments, the introduction of new formulations, and expanded production capacity.
This was sustained into the first quarter of this year and GCR projects that the firm could improve its revenue by 40 per cent due to increased capacity utilisation, rising sales volumes, and incremental contributions from export sales and new contract manufacturing arrangements.
Further, the EBITDA margin is projected to remain strong at around 27 per cent over the next 21 months, supported by increased contributions of margin-safe ethical medicines, sustained cost management, improved scale efficiency and cost savings from removal of VAT and import duties on drugs.
By Adedapo Adesanya
The Nigeria Customs Service (NCS) is seeking a reduction in import duty exemptions, which rose to N34 trillion, limiting its ability to increase its revenue generation threshold.
The Comptroller-General of the Customs Service, Mr Adewale Adeniyi, disclosed that the value of import duty exemption certificate approvals increased to that level in 2025, describing the policy as one of the major factors restricting its revenue generation.
At an investigative session of the Senate Committee on Finance with revenue-generating agencies in Abuja on Monday, Mr Adeniyi explained that government fiscal policies have continued to impact the revenue-generating capacity of the Customs Service, both positively and negatively.
“The NCS would have generated significantly higher revenue over the years if not for government-approved import duty waivers and other external factors affecting collections,” he said.
He added that the Import Duty Exemption Certificate scheme, introduced in March 2020, accounted for about N34 trillion in approvals in 2025, with nearly 60 per cent covering duty-free importation of military hardware due to Nigeria’s prevailing security challenges.
Other government-backed duty waivers, he noted, covered the importation of Compressed Natural Gas (CNG), electric and hybrid vehicles, healthcare equipment and medical supplies, industrial machinery and manufacturing inputs, as well as food import intervention programmes.
While acknowledging the impact of the waivers on Customs revenue, Mr Adeniyi argued that fiscal policy should not be assessed solely on the basis of revenue generation but also on its broader economic and social objectives.
He, however, urged the federal government to establish stronger monitoring mechanisms to ensure beneficiaries of duty waivers deliver the intended economic outcomes, including lower consumer prices, increased local production and improved healthcare access.
The committee also expressed displeasure over the absence of several heads of government agencies invited to the hearing, including the Nigerian Civil Aviation Authority (NCAA), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Industrial Training Fund (ITF), and the Federal Medical Centre (FMC), Jabi.
The Chairman of the Senate Committee on Finance, Mr Sani Musa, warned that the affected chief executives must appear at the committee’s next sitting or face severe sanctions under the Senate’s rules.
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By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rose by 0.40 per cent on Monday, July 13, buoyed by buying interest in 11 Plc, Central Securities Clearing System (CSCS) Plc and UBN Property Plc, which offset the profit-taking in Food Concepts Plc, the parent company of Chicken Republic.
11 Plc gained N20.69 to end at N227.64 per share compared with last Friday’s price of N206.95 per share, CSCS Plc grew by N1.83 to N91.48 per unit from N89.65 per unit, and UBN Property Plc added 1 Kobo to sell at N1.81 per share versus N1.80 per share.
On the flip side, Food Concepts Plc depreciated by 24 Kobo to close at N2.45 per unit, in contrast to the preceding session’s N2.69 per unit.
As a result, the market capitalisation increased by N9.2 billion to N2.587 trillion from N2.578 trillion, and the NASD Security Index (NSI) improved by 15.33 points to 4,311.67 points from 4,296.34 points.
Yesterday, the volume of securities traded by investors surged by 615.9 per cent to 9.1 million units from the previous 1.3 million units, and the value of securities rose by 997.1 per cent to N320.4 million from the preceding session’s N29.2 million, while the number of deals decreased by 12.5 per cent to 28 deals from last Friday’s 32 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 73.9 million units exchanged for N5.2 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
