Adcock Ingram maintains upward earnings trajectory in FY17

The 2017 financial results of “re-engineered” pharmaceuticals giant Adcock Ingram show continued recovery and positive performance three years after the group embarked on a significant restructure to turn around its fortunes.

Adcock’s “satisfying trading performance and exceptional increase in trading profits” for the year ended June 30, were characterised by double-digit increases in earnings despite the economic downturn and consumer spending pressure.

“It was only three years ago that a newly constituted leadership team at Adcock was grappling with crucial legacy matters, simultaneously planning the implementation of a decentralised organisational structure and operating control system, to better manage each of the various business units within the group,” Adcock CEO Andy Hall said on Friday.

The group had swung back into the black in the 2015 financial year against a backdrop of economic uncertainty, volatile currency conversion rates, production issues, customer relationship matters and a loss of market share.

During the financial year under review, however, Adcock posted a 20% increase in trading profit to R724-million, along with a rise in headline earnings from continuing operations from R376.4-million in 2016 to R513.7-million in 2017.

This translates into headline earnings per share (HEPS) and basic earnings per share (EPS) from continuing operations of 308.9c, an improvement of 36.6% and 38% year-on-year, respectively.

The total operations delivered HEPS of 312.6c and basic EPS of 332.9c, compared with the respective 228.7c and 101.4c in the prior year.

Adcock also posted a 7% increase in turnover to R5.9-billion, which rendered an improved gross profit of R2.2-billion, a 10% rise on the prior year.

Gross profit margins improved from 36.6% in 2016 to 37.8% in 2017, arising from the improved product sales mix, good inventory management and factory efficiencies.

“All commercial divisions showed an improvement in trading profit, with the prescription, consumer and hospital divisions’ growth all above 20%,” Hall noted.

Adcock ended the year under review with a net cash balance of R334.5-million, compared with net debt of R311.2-million at the end of the prior year.

The company on Friday declared a full-year dividend of 139c a share - an increase of 34% over 2016.