Adcock sees lower full-year profit; shares fall

Adcock Ingram, South Africa’s second-biggest drug maker, said on Monday it expected full-year profit to fall by as much as 22%, stung by a once-off charge related to a black economic empowerment (BEE) deal.

Adcock Ingram, which makes painkillers and other over-the-counter drugs, said it took a R269-million share-based payment charge in relation to a sale last year to black investors.

The company said last November it would sell a 13 percent stake to black investors for R1,3-billion, in order to meet government targets on black ownership.

As a result, the company said it expected to post a decline of between 19% and 22% in headline earnings per share for the year until the end of September.

Headline Earnings on Investopedia (EPS) is the main gauge of profit in South Africa and excludes certain one-time items. Excluding the charges, headline EPS most likely increased from 13% to 16%, Adcock said.

Shares in the company, which were up 20% so far this year, fell 1,18% to R64,65, underperforming a slightly higher all-share index.

Adcock, South Africa’s top over-the-counter drugs maker, has been squeezed as cost-sensitive customers cut the size of their purchases or move to cheaper brands.

However, lower interest rates and tentative economic recovery are encouraging consumers to spend more freely once again. — Reuters

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