Bloomberg News

Adcock Ingram’s Profit Beats Estimates on ‘Robust’ Demand

November 23, 2011

(Updates with comment from CEO in third paragraph.)

Nov. 22 (Bloomberg) -- Adcock Ingram Holdings Ltd., Africa’s largest over-the-counter drug company, said full-year profit rose 19 percent, beating estimates, after consumer demand for the company’s medicines increased.

Net income for the fiscal year through September grew to 754.2 million rand ($90.6 million) from 631.5 million rand a year earlier, the Johannesburg-based company said in a statement today. Earnings per share excluding one-time items advanced 31 percent to 4.65 rand, beating the 4.55-rand average estimate of eight analysts surveyed by Bloomberg.

“Our over-the-counter division was the star, with pain pills like Panado gaining 1 percent in market share,” Jonathan Louw, chief executive officer of Adcock, said in a telephone interview today. “Being less dependent on the regulated side of the industry has been good for Adcock.”

Adcock, which was a unit of Tiger Brands Ltd. until 2008, has been expanding in Africa as the continent’s demand for medicines grows. Having completed a black ownership deal last year, the company had a “war chest” of 1.4 billion rand in 2010 and wants to make acquisitions in Africa. Adcock hasn’t made any purchases large enough to warrant disclosure on cost in the past 12 months.

The company stands by its strategy to make acquisitions in the rest of Africa, including Nigeria, Louw said. Adcock announced a dividend distribution of 1.06 rand per share out of share premium, a 4 percent increase from last year’s payout. The company will look for opportunities to give cash back to shareholders, Louw said.

By catering more for the low-income market, Adcock will continue to see “strong volume growth” in the year ahead, Louw said. “As long as there’s robust demand we should continue to do well.”

--Editors: Ana Monteiro, Nasreen Seria

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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