2013-10-30
Aspen’s revenue soars to R19.3 billion |
Johannesburg - JSE Limited listed Aspen Pharmacare Holdings Limited (APN), the ninth largest generic company in the world and Africa’s largest pharmaceutical manufacturer, has announced excellent results for the year ended 30 June 2013.
Stephen Saad, Aspen Group Chief Executive said, “While all business segments recorded substantial growth, the International business excelled with a superb performance driven by a combination of organic and acquisitive revenue growth.. The largest revenue contribution to the Group came from the Asia Pacific business while Latin America was the fastest growing customer geography.†In the South African business, revenue improved by 20% to R7.4 billion and operating profit before amortisation, adjusted for specific non-trading items (“EBITAâ€) increased 11% to R2.0 billion.
Revenue in the Pharmaceutical division rose 20% to R6.2 billion driven by organic growth and a strong contribution from new product launches in the private sector. In the public sector expanding demand for antiretrovirals (“ARVsâ€) added to the growth momentum although the greater weighting of revenue from low margin ARVs was the largest factor in the contraction of margin percentages. The weakening of the rand and rising inflation in administered costs also put pressure on margins although this was partially relieved by gains in production efficiency and procurement savings.
The International business showed strong growth with revenue increasing 48% to R3.7 billion and EBITA rising 59% to R1.5 billion. Latin America showed the biggest advance where sales to customers in this territory climbed 53% to R1.6 billion. A combination of organic and acquisitive growth propelled the Latin American performance despite the impact of the currency devaluation in Venezuela. The global brands portfolio was an important contributor to the growth achieved in the International business and the margin improvement projects for these products continued to yield favourable outcomes. Contributions from certain territories in this business have also benefitted from relative currency strength against the rand.
Gross revenue in Sub Saharan Africa increased 26% to R2.1 billion driven by expanded promotional support. The negative growth in EBITA during the first six months was reversed with an increase of 16% in EBITA in the second six months bringing the result for the year to R252 million, an increase of 2%. Aspen has undertaken extensive corporate activity over the past year and the following transactions are being progression by Group companies:
Prospects The completion of the impending MSD and GSK transactions will transform the Group, expanding the global brands portfolio with the addition of established products which have strong market acceptance and widening Aspen’s geographic reach. This will enable Aspen to establish its own business units in Russia, other former Soviet republics and across Europe as well as extending its influence in Latin America and Asia. Significant management attention is being devoted to the development and implementation of the plans necessary to successfully execute these acquisitions. It is expected that synergies will be realised between these two transactions in addition to the focus Aspen will place on pursuing opportunities to achieve greater market penetration with the brands and improving production efficiencies. The International business will be the greatest beneficiary of the completion of the impending transactions and this will add further momentum to the impressive growth achieved by this region in the past year. Growth in the Asia Pacific territory will be supported by the impending transactions and the development of Aspen’s footprint in Asia. As the market leader in the private and public pharmaceutical sectors in South Africa, Aspen is well positioned to extend the solid performance achieved in the past year through organic growth. An entire new management team has been positioned in the Consumer division with further impetus pending the approval by the competition authorities of the infant nutritional transaction with Nestlé. In Sub Saharan Africa the focus will be on continuing the progress made in the second half of the past year. This territory remains vulnerable to geo-political volatility. Provided there are no material changes in the prevailing macro-economic conditions, in the forthcoming year it is expected that the solid growth platform already established in all regions will be strongly supplemented by contributions to the International and Asia Pacific territories from the take-on of the impending transactions, particularly in the second half of the year. Debt levels in the Group will initially be close to Aspen’s self-imposed limits, but this gearing is expected to reduce quite rapidly through strong operational cash flows. |