Pharmaceutical firm hopes to recover in second half of the year
Kampala, Uganda | ISAAC KHISA | Cipla Quality Chemicals Industries Ltd has recorded a decline in profit since it was listed on the Uganda Securities Exchange a year ago but its managers are now pinning its growth prospects on the increased drug capacity for the so-called third party demand.’
Financial results released on Dec.02 show that Cipla recorded a Shs14.5bn loss for the past six months ending Sept.30, down from a Shs3.3bn net profit recorded during the same period last year.
Management has attributed the fall in profit to reduced gross margins, impairment allowances, interest expenses and increased amortisation and depreciation charges.
The firm’s gross margin reduced from Shs32.8bn to Shs23.7bn while finance costs increased from Shs84million to Shs1.98bn during the same period under review.
On the other hand, amortisation and depreciation charges increased from Shs 2.55bn to Shs2.95bn. The shareholders will, therefore, not receive interim dividends.
Cipla’s share price has dropped from Shs265 during the Initial Public Offer to around Shs127 per share since most of the private investors sold their shares. Last year, Cipla recorded a sharp drop in net profit from Shs44.6bn to Shs6.8bn.
But the firm’s top executives – executive chairman, Emmanuel Katongole and CEO Nevin Bradford, noted in a joint statement that business is expected to be better in the second half of this year as Global Fund business rebounds.
“Based on the current visibility and run rates in the funder business, we expect continued acceleration from this revenue stream into the second half which will support strong growth compared to last year,” the firm said.
“Along with the President’s Malaria Initiative (PMI) and the ramp up of capacity in the fourth quarter to cater for the third party demand, we are confident we will meet our internal expectations and deliver strong growth in the second half and for a full year, despite a reduction in the Government of Zambia business.”
Cipla was awarded the USA’s PMI contract last year to manufacture and supply malaria treatments (Artemether Lumefantrine) to African countries including Rwanda and those outside Africa such as Myanmar which receives medicines funded by PMI.The firm’s executives said the profit enhancement will also be delivered in the second half of this year though it is predicated on the Zambia payment plan being realised and no further provision required going forward.Re-aligned reporting to IFRS […]
