Cost-cutting counterbalances Aspen’s currency losses
The company says its synergies programme delivered savings that partially offset the currency hit, ‘price erosion’ in Europe and a drop in revenue in the Australian nutritional division
Aspen Pharmacare took a knock from a stronger rand in the year to end-June but its headline earnings per share (HEPS) were flattered by the devaluation of its Venezuelan business in the previous year, and cost-cutting helped offset some of the currency losses.
Revenue rose 16% to R41.2bn, but that increase would have been 22% at constant exchange rates. Normalised HEPS were also up 16%, to R14.63 per share, and would have been 21% higher at constant exchange rates. HEPS rose 46%.
The currency translation was a R3.5bn loss, against a R5.2bn profit the year before.
Aspen said its synergies programme delivered savings of R1.2bn, partially offsetting the currency hit, "price erosion" as a result of mandated price cuts in Europe, and a sharp drop in revenue in the nutritional division in Australia, which led to a 3% decline in nutritional revenue across the group, despite growth in African and Latin America.
Aspen said its anaesthetics division posted revenue of R7bn. The company made two acquisitions in this sector in the year under review, of AstraZeneca’s anaesthetics division and GlaxoSmithKlein’s, in a move that also took it into China for the first time. This required "significant infrastructure investment and the establishment of a headcount exceeding 600, now comprising the group’s largest regional sales force", Aspen said. But early indications from China were encouraging, it said.
The group’s financing costs fell to R2.4bn from R3.2bn a year earlier.
Debt was an issue flagged recently by Gryphon Asset Management portfolio manager Casparus Treurnicht, who said excessive debt raised in the US and Australia had placed stress on the balance sheet when the rand blew out in early 2016.
A gross dividend of 287c per share was declared.
By 10.05am, Aspen Pharmacare had lifted 1.14% to R288.80 on the JSE.