Picture: THINKSTOCK
Picture: THINKSTOCK

Aspen Pharmacare expects an improvement in earnings for the year to June following the devaluation of its Venezuelan business in the previous year, among other factors.

On Wednesday, the company said the increase in earnings was lifted by the one-off negative effect in the same period a year earlier arising from the devaluation of Aspen’s Venezuelan business.

There had also been higher intangible asset impairments, which were offset by capital profits realised from the disposal of noncore businesses and products.

The company said headline earnings per share were expected to increase between 43% and 48%, valued at between 1,271.3c and 1,315.7c a share compared with 889c previously “attributable to the devaluation of Aspen’s Venezuelan business in the prior year”.

Earnings per share would rise between 16% and 21% from 945.4c a share.

Casparus Treurnicht, portfolio manager at Gryphon Asset Management, said there were many issues in the business, including the economic difficulties and hyperinflation in Venezuela, that had caused it to cease trading since late 2015.

Strikes and supply-chain issues with its South African operations had also resulted in setbacks for the local segment. Treurnicht emphasized that excessive debt raised in the US and Australia placed stress on the balance sheet when the rand blew out in early 2016.

“I understand they’ve taken out some forward contracts to mitigate this issue.”

Aspen’s results for the year to end June are expected to be published on September 14.

The share price was down 0.64% to R289,64 at the JSE’s close, having been in decline for two consecutive weeks.

Africa’s largest pharmaceutical company has a market capitalisation of more than R132bn and has an expanding presence in Latin America, Asia, Europe and Russia.

Aspen has acquired the marketing rights to a portfolio of anaesthetic drugs from AstraZeneca and GlaxoSmith-
Kline over the past 12 months to make it the largest anaesthetics seller outside the US.

gumedem@businesslive.co.za

 

Please sign in or register to comment.