Local pharmaceutical manufacturer Adcock Ingram Group reported a healthy operational and financial performance for the year to June 30 due mainly to higher demand for over-the-counter (OTC) and consumer healthcare products.
These two factors were key drivers behind a 12 percent increase in turnover to R8.7 billion, while gross profit was up 14 percent to R3.1bn. Trading profit increased 22 percent to R1.1bn. Headline earnings per share were up 24 percent to 502 cents and a 109 cents final dividend was declared.
Included in the healthy turnover growth was flagship brand Panado reaching a new milestone, with annual sales in excess of R500 million, said CEO Andy Hall. Organic volumes overall grew 6 percent, following the increased demand for the group’s basket of products, and mix contributed 5 percent.
The renal portfolio within the Hospital division and the ARV portfolio in the Prescription division experienced price deflation, which on a group-wide basis reduced the inflationary price increases achieved in Consumer and OTC, resulting in low price realisation overall.
An improved 35.1 percent gross margin was supported by a more favourable sales mix and the improved exchange rate on imported inventory purchases during the year.
Operating expenditure increased 10 percent due to higher selling and distribution expenses, and continued investment in marketing key brands.
Headline earnings for the year increased by 21 percent to R812 million, which translates into headline earnings per share increasing by 24 percent to 502. The 109 cents final dividend meant the dividend for the year had increased by 25 percent.
Adcock’s management said they remained confident in the resilience of their affordable and balanced product portfolio.
“Given the ongoing weakness in the local economy, high fuel prices and the significant deterioration of the rand, much of our focus for 2023 will be on management of margins.”
BUSINESS REPORT