The market welcomed Adcock Ingram, a local pharmaceutical manufacturer, issuing an interim dividend and healthy set of results on Tuesday despite Andy Hall, the CEO, flagging that trading conditions were expected to remain challenging.
By 11.37am the shares rose 2.02% to R52.50 on the JSE.
The owner of brands Panado, Corenza C and Citro Soda, among others, for the six months ended 31 December 2022, paid an interim dividend of 125 cents per share, a 20% hike.
Headline earnings per share (Heps) increased 20% to 290 cents. Trading profit increased 15% to R623 million.
Trading profit increased 15% to R623m, which it attributed to its diverse and affordable portfolio of products, well-executed sales and marketing strategies, and a continued focus on customer service.
Hall said, “The healthy financial and operational performance was delivered against a backdrop of tight economic conditions, disruption to operations due to utility supply challenges, currency devaluation and high fuel prices.”
Turnover increased by 8% to R4.7 billion. Adcock said the average price realisation was 3.6%. Organic volumes declined marginally, due to the normalisation of Panado demand, following the exceptional sales generated in the comparative period from the Covid-19 vaccination campaigns, lower ARV tender sales and reduced demand for other products used in relation to Covid-19.
“In aggregate these declines were well compensated for by good demand in the OTC and Prescription portfolios,” it said.
The gross margin for the six months remained relatively stable as a more favourable product sales mix and price increases realised in the non-single exit price (SEP) regulated portfolios, mitigated the cost impact arising from the weaker exchange rate, increased production costs and significant cost-push from suppliers, locally as well as from abroad, Adcock said.
Hall said, “Whilst we are confident that the strength of the group’s broad and affordable portfolio of well-known brands, will continue to withstand many of the macroeconomic challenges in South Africa, the low single exit price adjustment (Sapa) of 3.28% granted to the industry in the current calendar year will not compensate for the abnormal cost increases in certain raw materials and packaging, the weak currency, and above inflationary increases in wages and utilities.
“The group remains focused on improving its operational efficiency, growing the established brands and expanding its product range through the acquisition of non price-regulated products to defend its position in the market,” Hall said.
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