Adcock pulls rabbit out of hat

Healthcare company Adcock Ingram managed to pull a rabbit out of a hat when it announced headline earnings per share (Heps) growth of 26% off the back of 10% turnover growth to reach R6.5 billion for the year to June 30.

Turnover was driven by a better product mix, which incorporated more higher margin products, a small price increase, and improved volumes. The acquisition of Genop in January also contributed to volume and margin growth.

The 90-year-old company sells specialised instruments, and surgical and pharmaceutical products into the ophthalmic, optometry, skincare, aesthetic and plastic surgery markets in southern Africa and turned over R400 million in its last financial year.

The gross margin improvement from 37.8% to 39.2% was realised from an improvement in the exchange rate, a change in the sales mix and greater efficiencies at the Wadeville factory on the back of increased production of antiretrovirals.

In addition, well controlled operating expenses (allowing for the additional expenditure consequent to the Genop acquisition) contributed to the 20% improvement in trading profit which increased to R866 million from R724 million last year.

All commercial divisions showed an improvement in revenue and trading profit. Turnover in these over-the-counter products grew 7.6% to R1.9 billion. In what must be seen as a tick for management, the company was appointed by Abbott Laboratories to market, distribute and sell a range of products.