Adcock Ingram Holdings’ shareholders will benefit from 10% growth in dividends and the repurchase of 6 million shares for the year to June 30, after stronger sales of the group’s winter pharmaceuticals helped generate double-digit earnings growth and strong cash generation.
The results appeared to be favourably received by investors, as the share price ratcheted up by 7.4% to R65 yesterday morning, a sharp outbreak in the price trend as the price has been trading in a thin range around the R55.40 mark that it traded at a year ago.
Revenue increased 6% to R9.64bn. Gross profit was up 1% to R3.22bn. Headline earnings a share rose 10% to 616.6 cents. Net asset value per share increased marginally to 3688.1 cent from 3 526.9 cents. The final dividend was lifted to 150 cents from 125 cents a share.
Turnover growth was supported by average price realisation of 5% and a product mix benefit of almost 2%. Organic volumes fell by less than 1%, a substantial recovery from the 5% decline in the first six months. The second half benefited from increased demand for winter products, driven by a rise in cold and flu cases and other respiratory illnesses.
The board said they were pleased with the results because a good trading performance, coupled with cost controls, resulted in the business being able to deliver double-digit HEPS (headline earnings per share) growth.
They said the group would continue to seek additional affordable brands, as reflected by the recently-acquired Dermopal, to expand the non price-regulated portfolio, and pursue partnerships with respected multinational companies.
They said that they were encouraged by the positive sentiment generated by the Government of National Unity. This, with the possibility of interest rate cuts due to improving inflation, and progress on structural reforms in the electricity and rail sectors, were positive indications for the economy.
Nonetheless, they expected a significant recovery in consumer spend would take some time, should these factors remain favourable.
Also, the financial health of the business was subject to the performance of the currency and the ability to obtain selling price increases, both in the regulated and non-regulated portfolios.
Consumer segment revenue increased by 3% to R1.7bn. OTC (over the counter) revenue was up 8% to R2.46bn, the Prescription segment increased revenue 4% to R3.43bn, while Hospital segment revenue increased by 8% to R2.05bn.
In terms of trading profit, the Consumer segment was up 2% to R362.4m, OTC trading profit increased 10% to R383.56m, Prescription trading profit rose 10% to R351.91m, while Hospital trading profit fell 16% to R128.45m.
BUSINESS REPORT