Johannesburg - Pharmaceutical giant Adcock Ingram on Friday reported a 16.9 percent increase in profit to R606 million for the year to June, from R518m reported last year.
The company attributed the results, which were marginally higher than the market expectations, to better financial and operational performance.
The results, however, failed to lift the company’s share price as it remained flat for the better part of Friday. Adcock shares closed 0.15 percent higher on Friday at R46.87.
The maker of Corenza flu medicine and Panado said headline earnings from continuing operations amounted to R376.4m compared with R335.5m for the previous year.
The group said this meant that headline earnings per share from continuing operations would be 226.1c.
Normalised headline earnings per share, after adding back a non-recurring International Financial Reporting Standards 2 charge of R20.7m, arising from the July 2015 broad-based black economic empowerment scheme, increased 20.1 percent to 238.6c.
Adcock also reported a 7.5 percent revenue rise to R5.55 billion from R5.16bn last year, which was highlighted by continuing positive performance trend and market share gains across all divisions.
Chief executive Andy Hall said the company benefited from the divisional autonomy of the new structure, introduced during 2014.
Well managed
Hall said the move of improved customer service and customer relationship management translated to better financial and operational performance.
“Operating costs and assets have been well managed and controlled, with a resultant increase of 16.9 percent in trading profit to R606m.”
The group also said it managed to cut its net debt by R466m during the period.
“Most gratifying is the cash generation in the business which resulted in net debt for total operations over the past two years reducing from R1.1bn at June 30, 2014 to R217m at June 30, 2016. This important indicator shows the positive outcome of the group’s restructure and focused management control,” Hall added.
Shmuel Simpson, an analyst at 36ONE Asset Management, said the group beat the market expectations on these results. “Improved margins on the back of improved inventory management and a better mix helped profitability.”
The group said a dividend of 54c per share was declared for the year to June out of income reserves. Total dividend distributions for the year would amount to 104c per share, a 28 percent rise over 2015.
The group’s controlling interests in the Ghanaian and Indian operating businesses were reflected as assets held-for-sale at the end of the period.
“These operations are reflected in the financial statements as discontinued operations,” Hall said. “Both of these assets are carried at fair value, resulting in impairment provisions of R208m.”
Hall said given the healthy cash generation over the past two years, the group had significant resources available to focus on expanding the product portfolio, particularly in non-regulated areas.
BUSINESS REPORT