Adcock Ingram Holdings, the pharmaceutical and healthcare products group, lifted its dividend 17% to 250 cents a share in the year to June 30 and its board remains confident in the resilience of their brands.
Despite a challenging economic environment of currency weakness and volatility, poor economic growth and increasing pressure on consumer disposable income, the group achieved a healthy financial and operational performance in the past financial year, the board said yesterday in the results.
The group, which owns numerous brands including Betadine, Citro soda, Corenza, Gummy Vites, among others, purchased 9.2 million of its own shares during the year, at an average R51.16 each, resulting in a cash outflow of R472.1 million.
Adcock’s management also welcomed a recent ‘top-up’ SEP (single exit price) adjustment of 1.73%, following a 3.28% increase in January 2023, which would assist in easing margin pressure on the price regulated basket of products.
“The board remains committed in seeking additional affordable brands to augment the company’s range of products, through acquisitions and partnerships,” a statement said yesterday.
Revenue increased 5% to R9.13bn. New products, including E45 from Karo Pharma, contributed 4.2% to the increase. Overall price realisation of 3.4% was achieved. Organic volumes fell 2.7%, due to lower demand for products used to treat Covid-19, and lower ARV tender sales.
Good demand in the OTC (over-the-counter) and prescription portfolios compensated for these declines. Trading profit increased 6% to R1.18bn due to strength in the margin, with just a 3.1% increase in operating expenditure. Gross profit rose 4% to R3.19bn.
The gross margin fell slightly from 35.1% to 34.9%. The weaker exchange rate, increased production costs and cost push from suppliers were mostly compensated for by improved factory throughput and efficiencies, as well as selling price increases in the non-regulated portfolio.
Headline earnings a share was up 12% to 561.3 cents. Net asset value per share increased to 3 526.9 from 3 242.4 cents.
The consumer segment revenue increased 6% to R1.65bn. The OTC segment increased 11% to R2.28bn. The prescription segment grew revenue by 2% to R3.29bn. The hospital segment rose 2% to R1.9bn.
The consumer segment trading profit was up 2%, OTC trading profit was up 10%, prescription drug trading profit increased 16%, while hospital product trading profit fell by 7%.
Adcock Ingram provides an extensive portfolio of branded and generic medicines, has a strong presence in over-the-counter brands, and is South Africa’s largest supplier of hospital and critical care products.
Its share price increased 2.4% to R54.91on the JSE yesterday afternoon, a price that lived up to a belief among many analysts that pharmaceutical stocks are defensive to weak economic conditions, in that the price was 10.9% higher than a year before, and 27.1% higher over a three-year time period.