JOHANNESBURG  - JSE-listed pharmaceutical manufacturer Adcock Ingram yesterday reported results that were ahead of market expectations.

Both headline earnings from continuing operations and headline earnings per share (Heps) increased by 33percent for the six months to end December. Headline earnings grew to R320million, while Heps increased to 192.6cents a share.

In the trading update released to the market last week, the group said it expected to report an increase of between 27percent and 30percent in headline earnings and Heps.

The share price rose 2.75percent on the JSE yesterday to close at R70.90.

The group said it remained positioned for growth, despite operating in an environment dominated by political uncertainty and high levels of unemployment.

“The group remains competitively positioned,” it said.

Group turnover increased by 7.4percent to R3.20billion, up from R2.98bn compared to last year, and it said that this was mainly driven by a realised average price increase of 5.2percent while volume growth and new product launches contributed the balance.

The gross margin improvement from 36.1percent to 38percent was realised from the improvement in the exchange rate, increased ARV throughput at the Wadeville factory as well as an improved sales mix.

Operating expenses were well controlled and increased in line with sales by 7.4percent, resulting in a 25percent improvement in trading profit to R428m, up from R342m.


Chief executive Andy Hall said the group managed to increase turnover by 7.4percent, gross profit by 13percent and trading profit by 25percent despite a challenging operating environment.

“It is pleasing to note that the results achieved have been attained through a focused and dedicated approach by each of the business units,” Hall said.

The group said cash generated from operations amounted to R456m during the period despite working capital increasing by R86m.

The improvement in the group's net cash position was reflective in the change from a net finance cost of R17.7m in the comparable prior period to net finance income of R0.3m in the current period.

The group declared a dividend of 86cents a share and it said this was an improvement of 37percent when compared to the comparable prior period.

Hall added that the group was pleased with the quality of earnings and the operational and strategic progress achieved.

“However, the operating environment remains challenging in South Africa, especially seen in the light of the recent disappointing single exit price increase of 1.26percent,” he said.