Cape Town – Adcock Ingram Group [JSE:AIP] reported a 20% rise in trading profit on the back of a 7.1% increase in turnover in its interim results to December 31 2015 on Wednesday.
“We have achieved these results while facing an increasingly difficult economic climate, with currency devaluation and increasing inflation and interest rates. Operating in a controlled pricing environment has deprived us of the flexibility to adjust prices as costs increase,” said chief executive Andy Hall.
The turnover increase to R2.752bn was thanks to a 7.5% single exit price (SEP) increase granted in April 2015, said Adcock.
The company said that volume was up but offset by “the discontinuation of certain uneconomic product lines in the Consumer Division and the repatriation of some multinational products from the Prescription Division”.
BEE deal
Trading profit was R292.6m thanks to a turnaround strategy and despite an 8% lift in marketing spend.
“While all divisions showed positive sales growth, three of the four divisions also improved profitability. The judicious and increased promotional investment in our leading brands is showing pleasing results. All this, supported by an excellent performance versus the market, with overall market share gains reflected in external data sources such as IMS and Nielsen,” said Hall.
The board declared a dividend of 50c per share and the company also concluded a B-BBEE deal, resulting in level 4 rating.
“The level 4 B-BBEE rating achieved under the new codes, in contrast to the level 3 rating held previously, is most encouraging and reflects the hard and continuing work put into this important aspect of conducting business in South Africa,” said Hall.
He added that Adcock is looking to expand with acquisitions and brand investment.
“The Group is focused on searching for appropriate acquisitions to bolster its non-regulated portfolio, building mutually beneficial partnerships and innovating within its current product portfolio.”
Adcock Ingram shares were 1.32% up at R30.01 in mid-morning trade.