The pharmaceuticals group says it prefers to adopt a prudent cash preservation approach until the full impact of Covid-19 is better understood.
Adcock Ingram’s full-year performance has been supported by increased demand for Panado and medicine aimed at boosting immunity. It says there was also exceptional demand for its Adco Hygiene range following the outbreak of Covid-19 earlier this year. But, like pharmacy groups Clicks and Dis-Chem, it says the virtual absence of a cold and flu season this winter had a negative impact on its OTC (over-the-counter) division.
Releasing results for the year to end-June, the pharmaceuticals group said its Prescription division was also impacted by the pandemic and subsequent lockdown, which resulted in lower levels of patients consulting doctors and visiting dispensaries, and the postponement of elective surgeries. These were countered by double-digit growth in sales and trading profit at its Consumer and Hospital divisions.
Turnover rose 4% to R7.3 billion over the year as average price increases of 2.6% and sales of higher-margin products made up for a 3% decline in volumes – mainly in the OTC and Prescription businesses. However, the unfavourable exchange rate and additional Covid-19 expenditure at its factories left trading profit 1.2% lower at R944 million. Headline earnings from continuing operations increased by 1% to R710 million while headline earnings per share fell 1% to 417.5c, after taking into account the lower number of treasury shares following the unwinding of its black economic empowerment scheme.
Although it was in a healthy financial position and had generated strong cash flows, Adcock said the pharmaceutical market has seen a slow-down subsequent to March. Due to extraordinary levels of uncertainty in the economy and operating environment brought about by Covid-19, it has decided to preserve cash rather than paying a final dividend.
This set of results has been achieved despite the depressed trading environment and the challenges that have been brought about by the Covid-19 pandemic, such as the significantly weak Rand and unplanned expenditure,” CEO Andy Hall said. “Despite these challenges we have remained focused on ensuring that we continue to produce and supply life-saving and acute medicines in South Africa that are much needed during the pandemic.”
Main Image: Adcock