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Adcock Ingram, which sells brands such as Panado and Corenza-C, hiked its dividend payout to shareholders by a fifth as the JSE-listed pharmaceutical manufacturer delivered double-digit earnings growth for the six months to December.
The company, which is majority-owned by industrial conglomerate Bidvest, attributed its performance to its "diverse and affordable portfolio of products", its sales and marketing strategies as well as a "focus on external and internal customer services". The results also received a favourable response from the market, with shares in Adcock rising 1.05% to R52 by 09:20.
Click here for more details about Adcock Ingram's share price and other info
Adcock raised its dividend 20% for the six months to end December to 125 cents as headline earnings per share increased by the same percentage to 289.9 cents. Revenue and gross profit increased 8% to R4.67 billion and R1.64 billion respectively.
Describing the results as a "healthy financial operational performance", Adcock said it had managed to achieve this even as it operated against a backdrop of "tight economic conditions, high levels of disruptions to operations due to utility supply challenges, currency devaluation and high fuel prices".
However, the company warned that trading conditions were "expected to remain challenging" saying consumers were coming under increasing pressure because of rising transport, food, electricity and borrowing costs.
At the same time the "low" single exit price (SEP) adjustment of 3.28% granted to the industry by the state in the current calendar year would "not compensate for the abnormal cost increases in certain raw materials and packaging", as well as the weak currency and above inflation increases in wages and utilities. The SEP is the maximum price a medicine can be charged in SA.
As a result, it said "gross margin compression" would be "difficult to avoid".
