Pharmaceutical operations gives Adcock Ingram a boost
This article first appeared on IOL
The Adcock Ingram Group has reported an 11% increase in headline earnings per share to 421.7 cents from continuing pharmaceutical operations for the year to June 30, 2019, in spite of weaker consumer spending.
The share price increased 4.3% to R57.90 Wednesday morning after the release of the results, in a market where the JSE All Share index barely moved.
Turnover rose 11% to R7 billion, and trading profit was up 12% to R955 million. A final dividend of 100 cents per share lifted the total for the year by 16% to 200 cents. CEO Andy Hall said the “pleasing” results were attributed to a well-diversified portfolio of trusted brands.
The prescription and consumer divisions showed “excellent growth” and the hospital business made "good gains" in the private sector. The increase in turnover was due to a change in mix of 5%, of which Genop, acquired near the end of 2017, contributed the majority.
Group volumes increased almost 4%, and price, mainly in the OTC (over the counter) and consumer businesses, contributed the balance. The gross margin improved slightly to 39.4%, despite the weak rand and a “sub-optimal annual single exit price increase.”
Most commercial divisions improved trading profit with the prescription, consumer and hospital divisions growing in double-digits.
The OTC division struggled in the second half, impacted by down-scheduling of certain analgesic products, and better production in the high-volume liquids factory.
The Zimbabwean operation and an interest in a Ghanaian company were disposed of following an intention not to invest in fixed infrastructure outside South Africa.
The Bidvest Group’s shareholding in Adcock Ingram recently increased to 50.1%. The aim was to bring closer operational and growth possibilities for Adcock Ingram’s operations.
“The board expects the weak exchange rate and currency volatility, and constraints on consumer spending will not change in the short-term.” said Hall.