Drastic decline. Cipla reported an 84.8 per cent profit fall due to a decline in Global Fund drug purchases. FILE PHOTO Institutional investors at Uganda Securities Exchange have adopted a wait-and-see approach towards Cipla Quality Chemicals given a sharp decline in both share price and profit after tax.
Cipla’s share price – which produces anti-retroviral, anti-malaria and Hepatitis B drugs – has dropped by 49 per cent since it started trading in September last year.
It has fallen from the initial public offering (IPO) price of Shs256.5 per share to Shs130 at the end of July, worsened by low trading and limited earnings.
Besides this, the company reported weak full year results in March with profit after tax falling by 84.8 per cent to Shs6.79b for the year ended March 2019.
Total sales declined to Shs195.1b from Shs227.3b as at the end of March 2018 due to a drastic decline in orders by Global Fund.
Total cost of sales dropped to Shs125.5b by close of March from Shs130.9b as at the end of March 2018, while total administration expenses rose to Shs23.6b from Shs17b during the period.
Total assets rose to Shs287.6b in the period from Shs209.2b in March 2018 and the company did not issue dividends, citing high capitalisation needs.
However, amid declining numbers, the company remains optimistic, announcing in its annual report that opening of new markets such Zambia will offer a turnaround.
The company also noted that some investments including a Shs12b pallet storage facility, distribution centre, warehouse and expansion of the production line to 130 million tablets per month from 80 million, which had eaten into its profits are expected to make better returns.
The company previously secured regulatory approvals for drug exports to Kenya, Tanzania, Rwanda, South Sudan, Zimbabwe, Malawi, Mozambique, Botswana, Namibia, Ivory Coast, Sierra Leone, Ghana and Angola, but the annual report does not indicate returns or orders from such markets.
While total drug sales in Zambian have exceeded $10m to date, the company delivered drugs worth $400,000 to Tanzania last month. Regulatory approval was also obtained from the Ethiopia for ARVs supplies this year, according to Mr Nevin Bradford, Cipla’s chief executive officer.
Around 100 million doses meant for HIV/Aids and malaria treatment were delivered to the Sierra Leone in July. But a wide gap seemingly persists between the sharp decline in Global Fund […]
