Aspen sticks to profit outlook


Aspen sticks to profit outlook

Published Date: 2020-05-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

Aspen sticks to profit outlook

There has been elevated demand for some products, while others have suffered due to declines in elective surgical procedures due to Covid-19.

Aspen Pharmacare has maintained its full-year outlook and still expects earnings for the year to end-June to be higher than last year. But the pharmaceuticals group says the unusual demand patterns experienced so far this year don't necessarily represent trends that will continue over the rest of the period of the Covid-19 pandemic.

In an update for the ten months to end-April, Aspen said elevated demand for Anaesthetics in Europe over the past few months offset an expected decline in its Chinese business as elective surgeries were postponed and haemodialysis treatments became less frequent. The Chinese business had shown signs of recovery since the easing of lockdown restrictions in that country, it said.

In Europe CIS, Aspen's largest Thrombosis region, the effect of Covid-19 had been largely neutral, with declines in elective surgical procedures countered by increased hospitalisation rates of medically ill patients. A strategic review and internal restructuring of the Europe CIS business had continued and it expected to finalise the outcomes of the review and make a decision on an appropriate course of action by September. Last July, the group ended talks with a potential partner for its European Commercial Pharmaceuticals business.

The group said stockpiling of everyday healthcare products and advanced filling of prescriptions by consumers in response to Covid-19 had a positive impact on its Regional Brands business. This has led to overstocking in supply channels and in households which it expected to result in decreased demand over the next few months as stock levels equalised.

Its manufacturing facilities had maintained operations at normal capacity, with enhanced safety measures introduced to protect employees. Aspen's API (active pharmaceutical ingredient) manufacturing business had been positively impacted by the sale of heparin API to third parties, while the underlying API and finished dose form operations had also continued to perform well.

The group completed the sale of its Japanese business to Sandoz, a division of Swiss multinational Novartis, at the end of January for up to €400 million and said the net proceeds had been used to repay short-dated Euro denominated debt. It said it expected to deliver a leverage ratio of below its covenant level of 3.5x when it releases its results on 9 September.

Aspen's shares rose 5% to R135.78 on Friday.

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