No dividend as Aspen gets debt down


No dividend as Aspen gets debt down

Published Date: 2020-09-10 | Source: Stephen Gunnion | Author: Stephen Gunnion

No dividend as Aspen gets debt down

Following a number of disposals, the pharmaceuticals group says a reshaping process is complete.

Aspen Pharmacare says the sale of the rights to its thrombosis business in Europe marks the end of the process to reshape the foundation of the group. After reducing its debt to more comfortable levels, it says the proceeds from the disposal will also give it the firepower to make acquisitive investments as it refocuses on emerging markets.

The pharmaceuticals group sold the commercialisation rights and intellectual property of the thrombosis portfolio to global pharmaceutical company Mylan for €642 million. Even without that, the group reduced its its net borrowings to R35.2 billion by the end of June, down from R39 billion a year earlier, using its strong cash flow and the proceeds from previous disposals. That reduced its leverage ratio to 2.89 times, comfortably below its covenant ratio of 3.5 times.

Releasing results for the year to end-June, Aspen said its business model had proved resilient through the Covid-19 pandemic and the uncertainty and challenges it had created for companies across the globe. The hard lockdown in China earlier this year restricted sales of medicines there for at least three months. That was offset by an early spike in demand for some of its drugs, particularly in SA, Australia and Mexico. In Europe, there was a significant need for sterile products required to treat Covid-19 patients during the height of infections, but a decline in orders for products related to elective surgeries. Social distancing since the first wave of the pandemic had resulted in reduced infection rates in non-Covid-19 communicable diseases and a slow and uncoordinated resumption of elective surgeries, adversely impacting its performance.

Revenue from continuing operations rose 9% to R38.6 billion and normalised earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 7% to R11 billion. Normalised headline earnings per share (HEPS) came in 9% higher at R14.65. It said its financial performance was positive impacted by material relative movements in exchanges rates from March to the end of June.

Discontinued operations included its infant nutritional business and its Asia Pacific non-core pharmaceuticals portfolio, which were sold in the 2019 financial year, as well as the disposal of its Japanese business and its public sector ARV transaction this year. Due to the ongoing uncertainty created by Covid-19, it held back on a dividend.

Its shares fell 1.3% to R139.45 yesterday. The results were released after the close of trade.

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