GlaxoSmithklime Share Price Declines 15 % on Profit Taking

Shares of GlaxoSmithkline Consumer Nigeria (GSK) Plc declined 14.2 per cent last week following profit taking by investors after the stock recorded an unprecedented rally last month. Investors had increased demand for the stock following the announcement of a distribution of a total of N8.97 billion as dividend to shareholders for the 2017 business year. According to the board of directors of GSK, it approved the payment of N8.49 billion as special dividend and N478.4 million as ordinary dividend, bringing total payout for the 2017 business year to N8.97 billion.

While the special dividend is N7.10 per share, the ordinary dividend is 40 kobo per share bringing the total dividend to N7.50 per share. In a move to benefit from this dividend, some investors had increased their demand for the stock, a development that lifted the share price from N21.00 N34.00.

However, profit taking set in last week, causing the stock to fall to by 14.7 per cent to close lower at N29.00 per share. Some market analysts said the stock may witness further decline this week as more investors move to lock in profit.

GSK made N20.9 billion in 2016 from the sale of its drink business to Suntory Beverage and Food Nigeria Limited. The amount being cash was kept in the bank by the company until it has now decided to distribute it to its shareholders. Before the N7.10 special dividend, the company had paid a special dividend of 60 kobo per share in 2016 amounting to N717 million.

The company had in 2016 concluded a N22.6 billion divestment of its drinks business to the Japanese group, Suntory Beverage and Food Limited ( SBF). GSK Nigeria’s drinks business included the two iconic brands-- Lucozade and Ribena. The Chairman of the GSK, Mr. Edmund Onuzo had told shareholders last year that the divestment of the company’s drinks business in enabled the company to align with the global strategy and focus on its core businesses with the aim of driving improved margins and sustainable growth.

According to him, although the immediate outcome of the divestment is a leaner and nimble company, focus on healthcare would enhance GSK’s brand portfolio.

“In 2017, GSK would focus on growing major brands like Sensodyne, Panadol, Andrews Liver Salt and Macleans to drive baseline profitability. These are part of our sustainability measures, we are now more focused on our core strength and going forward, we hope to aggressively build our consumer healthcare portfolio,” Onuzo said.