Adcock Ingram’s shares fell by more than 3 percent yesterday morning after the South African pharmaceutical manufacturer reported a double-digit decline in its half-year earnings, due to a low number of patients consulting doctors and the postponement of elective surgeries.
Adcock’s headline earnings a share (Heps) declined by 14.6 percent to 186.5 cents a share for the six months to the end of December, down from 218.5c compared with last year.
Chief executive Andy Hall said the results were achieved in a challenging trading and operating environment, with the uncertainty that the Covid-19 pandemic continues to bring.
“Despite these challenges, Covid19 has also presented the company with opportunities to adapt to the ever-changing environment, and at the same time deliver on our promise of ‘adding value to life’ by producing and supplying life-saving and acute medicines, especially at a time when they are needed the most,” Hall said.
Group turnover rose by 4 percent to R3.8 billion.
Its price realisation was 4.7 percent, slightly ahead of the single exit price increase of 4.5 percent awarded in February last year, while organic volumes declined by 6 percent, mainly as a result of the absence of a cold and flu season that severely impacted the over-the-counter (OTC) division, where cough and cold formulations normally make up 40 percent of their portfolio.
Adcock’s trading profit fell 11.7 percent to R433 million, but the group declared an interim dividend of 80c.
Adcock operates consumer, OTC, prescription and hospital divisions.
The consumer division reported a 42 percent increase in turnover to R599m, and trading profit was up by 48.2 percent to R73.4m, boosted by the acquisition of Plush, which contributed R119m to revenue.
The OTC division reported a 16.5 percent decline in turnover to R784.7m, and trading profit declined to R109.3m.
The prescription division turnover increased 5.6 percent to R1.50bn, while trading profit was flat at R142.2m.
The ARV portfolio grew 40 percent to R310m, benefiting from state tender orders.
However, demand for the branded prescription portfolio was severely impacted by Covid-19, which resulted in lower levels of patients consulting doctors, lower dispensary traffic in pharmacies, as well as the postponement of elective surgeries.
The hospital portfolio reported a 5.4 percent increase in turnover to R870.3m, and trading profit increased by 5.7 percent to R75.8m.
Adcock expected the economy and consumers to continue to remain constrained for the remainder of the year.
“The continued roll-out of the government’s vaccination plan is eagerly anticipated, to bring relief to South Africa’s healthcare system, frontline workers and economy,” the group said.
Adcock Ingram shares closed 3.78 percent lower at R43.30 on the JSE yesterday.