H1 2026: Fidson sales boom, but customers now owe N26 billion

Fidson Healthcare delivered another strong performance in the first half of 2026, with revenue rising 18.9% to N74.48 billion and profit after tax climbing 28.16% to N7.721 billion. But the company's balance sheet shows that customers owe more than ever before.

Gross trade receivables jumped 139.7% to N26.34 billion at the end of June, up from N11.02 billion in December 2025. That means the amount outstanding from customers increased by N15.41 billion in just six months.

Strong half-year, stronger growth

In just six months, Fidson generated about 62.6% of its entire 2025 revenue and 78.2% of the pre-tax profit recorded for the whole of last year. The performance builds on an already strong 2025, when profit after tax more than doubled by about 126% to N9.88 billion, while earnings per share rose from N1.92 to N4.12.

Fidson subsequently increased its dividend to N1.50 per share from N1.00 in 2024. Also, Fidson's share price has gone up 86.7% year-to-date.

The additional N15.41 billion owed by customers was almost twice the N7.72 billion profit after tax Fidson earned during the entire half-year and about 1.3 times its N11.70 billion pre-tax profit. That matters because a company can recognise revenue and the resulting profit before the cash from those sales has actually been collected.

Receivables and the operating cycle

For now, the increase does not mean Fidson has N26.34 billion of bad debt. The notes to the unaudited half-year accounts state that trade receivables are expected to be fully collected within one year, while impairment recognized against the gross trade receivables stood at N492.84 million as of June 2026.

At the end of June, Fidson was carrying N25.14 billion in inventories alongside N26.34 billion in trade and other receivables. Together, that represents about N51.48 billion sitting in products waiting to be sold or money waiting to be collected, and that is about 47% of the balance sheet size.

Suppliers provide some financing for that cycle. Trade and other payables increased to N17.48 billion from N6.63 billion at the end of 2025, meaning Fidson is also taking more credit from suppliers as the business expands. But the supplier credit does not appear sufficient on its own to finance the entire operating cycle.

Using average inventory, receivables, and payables balances for the period, Fidson held inventory for about 110 days before it was sold, while receivables took another 45 days to convert into cash. That gives the company an operating cycle of about 155 days. Against this, trade and other payables provided roughly 51 days of financing. The result is an estimated cash conversion cycle of around 104 days.

Put simply, Fidson may spend roughly five months moving capital through inventory and customer collections, while suppliers finance only about two months of that period. At roughly 104 days, Fidson's estimated cash conversion cycle does not appear unusually long when compared with major international pharmaceutical manufacturers. Large generic-drug makers such as Cipla, Sun Pharmaceutical, and Dr. Reddy's operate with considerably longer reported cash conversion cycles, while Hikma Pharmaceuticals reported working-capital days of 245 in 2025.

Cash position and the road ahead

For now, the balance sheet and cashflow statements suggest that Fidson has the capacity to fund the gap. Net cash generated from operating activities rose 67% to N28.09 billion in H1 2026 from N16.82 billion, despite the sharp increase in receivables. That operating cash flow was more than 3.6 times the N7.72 billion profit after tax reported for the half year.

The company ended June with N13.12 billion in cash and bank balances, up from N4.71 billion at the end of 2025, while current assets of N71.75 billion comfortably exceeded current liabilities of N42.38 billion. That leaves Fidson with net working capital of about N29.36 billion and a current ratio of roughly 1.69 times.

But the bigger concern is what happens if the gap keeps expanding. Around 84% of its interest-bearing loans are classified as current, with N20.51 billion due within the short term compared with only N3.85 billion of non-current loans. That means a significant portion of the financing supporting the business has a relatively short maturity.

If sales continue growing while receivables expand at a similar pace, more of the company's capital will have to remain inside the operating cycle. If internal cash generation cannot keep pace, Fidson could have to rely more heavily on borrowing. That would eventually reach the income statement. Higher borrowing could push finance costs above the N2.91 billion recorded in H1, reducing pre-tax profit and profit after tax. A deterioration in collection quality could also result in larger impairment charges against receivables. Either way, the pressure ultimately reaches shareholders through earnings per share and dividends.

For Nigerian businesses watching Fidson, the lesson is straightforward: fast sales growth can hide a growing need for cash. How quickly a company collects from its customers may soon matter as much as how much it sells.