JSE-listed pharmaceuticals manufacturer Adcock Ingram says it has delivered a “resilient performance” for the six months ended December 31, 2023, despite challenges facing consumers, such as high interest rates, exchange rate depreciation, high inflation and loadshedding, which, consequently, result in lower disposable income.

The group achieved an increase in turnover of 1% to R4.7-billion for the six-month period. Turnover grew in the consumer and hospital divisions, but was flat in the prescription and over-the-counter (OTC) divisions.

The higher turnover was supported by price realisation of 4% and a mix benefit of 2%. Organic volumes declined by 5%, impacted by the difficult trading environment, certain inventory supply challenges caused by port delays in South Africa and lower antiretroviral (ARV) tender sales.

Adcock Ingram CEO Andrew Hall noted during a financial results presentation on February 21 that the OTC division was most impacted by inventory supply chain challenges.

Further, the gross margin for the six months under review declined from 35% to 34%, mainly impacted by an average increase of 14% in forward exchange contract rates for products acquired in foreign currency.

Operating expenditure was well controlled and decreased by 2.5%, resulting in trading profit of R618-million, just below the previous corresponding period.

Headline earnings a share of 293c improved by 1%, benefiting from the group’s repurchase of 1.7-million shares in the current reporting period and 7.7-million shares repurchased during the second half of the previous financial year.

Meanwhile, the Adcock board has declared an interim gross dividend out of income reserves of 125c a share in respect of the six months ended December 31, 2023.

The South African dividend tax rate is 20% and the net dividend payable to shareholders who are not exempt from dividend tax is 100c a share.

“The group will continue to focus on expanding its product portfolio, by acquisition or partnership, particularly in less price-regulated product classes, to grow revenue and protect margins. We are encouraged by the Single Exit Price Adjustment awarded for 2024 of 6.79%, which will go some way to alleviating the margin pressure caused by the weak rand,” Hall added.

Meanwhile, power interruptions near the company’s Aeroton facility, which produces renal fluids and blood collection bags, affected the municipal water supply to the plant in the last quarter. As a result, Adcock has installed two million-litre tanks at the facility. The tanks were commissioned in January.

The company has also installed solar installations at five of its sites and, in the current reporting period, these sites have delivered 6% of the company’s total power consumption.