Wemy Industries, a Nigerian company manufacturing and distributing hygiene products, within the fast moving consumer goods’ (FMCG) segment, is growing so fast that its revenues could top $1 billion in 10 years.
“With the growth Wemy is recording, we can easily do $200 million in sales in six years and up to $1 billion in a decade,” Paul Odunaiya, MD of the firm, said in an interview with BusinessDay at the company’s headquarters in Lagos.
Wemy industries had $15 million in sales at the end of last year up some 500 percent from $2.5 million four years ago. Sales are surging as Nigeria’s young and growing population of 170 million people get richer and demand more hygienic baby, feminine and adult care products. Keeping up with the huge demand, however, means the firm has to raise more capital to help scale up production at its manufacturing plant in Lagos.
“One of the biggest challenges manufacturers face is the prohibitive cost of capital in the country. We need massive and cheap capital,” said Odunaiya, who was a former energy futures trader in the United Kingdom before moving to Lagos to head the business.
Wemy plans to list on the Nigerian Stock Exchange at some point as it grows larger. “We have been approached by some private equity (PE) firms and we should close a deal before the end of the year,” Odunaiya added. Wemy is the only indigenous manufacturer of baby diapers in Nigeria, but has American giant Procter and Gamble and imports from China as its major competitors.
Nightingale and Dr Brown’s are two brands under which Wemy’s diaper products are sold. “We are a re-order business, which means the essence of our business is quality,” said Odunaiya. “We are number 2 in the market in terms of diapers.”
BusinessDay estimates that Wemy could garner a valuation of $42.9 million (N8.5 billion) based on 2014 performance when compared to listed peers like Unilever Nigeria trading at 2.86 times sales, although an additional premium may be priced due to the firm being in a growth phase.
Wemy experienced slow- down in sales between January and April 2015 due to the just concluded elections, but orders had picked up again, according to Odunaiya. The upside for Wemy is huge as there are more babies born in Nigeria in a year than in all of Western Europe. The company spends N4 million monthly in sourcing alternative energy, and is looking to re-start the export of its products with focus on West Africa later this year, ac- cording to Odunaiya.
The recent naira devaluation and the fact that the company depends on the foreign exchange market to import its raw materials also impacted on the firm. “What we are doing is to make sure we produce our goods as cheaply as possible so as to withstand any head- wind,” he added.
The firm has grown from a mono product company to a company that manufactures and trades on over 15 product lines with coverage in all states in Nigeria.
Wemy currently has 400 employees and over 60 distributors nationwide and 10 depots.