Aspen Pharmacare slumps 10% as stronger rand hits revenue

Pharmaceutical manufacturer Aspen Pharmacare said on Tuesday a stronger rand in the second half of its financial year weighed on revenue to the tune of R1bn.

In constant exchange-rate terms, revenue in the second half of the financial year was in line with the first half, but Aspen’s voluntary statement disappointed the market, sending its share price as much as 10% lower before losses were pared.

Headline earnings per share (HEPS) are expected to grow by between 11% and 15% to between R14.42 and R14.94, while earnings per share are expected to rise between 15% and 19% to between R12.92 and R13.37.

The company’s preferred measure of performance, normalised HEPS, are expected to rise between 8% and 12% to between R15.80 and R16.39.

Normalised HEPS adjusts for specific nontrading items.

Aspen’s share price has been under some pressure since 2015, with the company pursuing an aggressive growth strategy as it considers whether it should focus on generic medication or more specialist medication.

In the six months to end-December, the company had reported revenue of R21.9bn — an 11% rise from the previous comparative period. At the time, the company had flagged the risks of a stronger rand, noting that 80% of its sales were denominated in other currencies.

Aspen’s results to end-June are expected to be published on or about September 13.

At 10.30m Aspen’s share price had fallen 7.03% to R272.59, having lost 2.19% so far in 2018.

Correction: September 4 2018

An earlier version of this story referred to earnings instead of revenue in the first paragraph, and net HEPS rather than normalised HEPS in the fourth and fifth paragraphs. The HEPS amounts were also misstated.

GernetzkyK@businesslive.co.za