Pharmaniaga’s 3Q earnings collapse on higher opex

by SHAZNI ONG/ pic by HUSSEIN SHAHARUDDIN

PHARMANIAGA Bhd’s third-quarter (3Q) net profit nosedived due to higher operating expenditure (opex), primarily non-recurring expenses.

Pharmaniaga recorded a 97% drop in net profit to RM481,000 or 0.18 sen earnings per share (EPS) for the quarter ended Sept 30, from RM15.05 million or 5.79 sen EPS in 3Q18, its exchange filing yesterday stated.

The weaker profit comes despite revenue for the quarter rose 22% year-on-year (YoY) to RM716.85 million on stronger demand from its concession and non-concession businesses.

Pharmaniaga MD Datuk Farshila Emran said the group foresees further impact on earnings due to higher amortisation of the Pharmacy Hospital Information System in the final quarter of the year.

“The group remains optimistic about long-term prospects, particularly given the extension by the Ministry of Health (MoH) for the provision of medicines and medical supplies to MoH facilities from Dec 1, 2019 to Dec 31, 2021. The group will continue to provide logistics and distribution services to the MoH for a period of five years ending Dec 31, 2024,” she said in a statement yesterday.

In the interim, Pharmaniaga will focus on strengthening its capabilities and operational efficiencies in the domestic and overseas markets, she said.

For the cumulative nine months (9M19), Pharmaniaga’s net profit fell 22.75% YoY to RMRM29.38 million, while revenue was 17.7% YoY higher to RM2.1 billion.

During the 9M19, Pharmaniaga noted that its logistics and distribution division posted a profit before tax (PBT) of RM17 million driven by better contributions from the non-concession business despite higher operating costs.

Its manufacturing division recorded a PBT of RM36 million on the back of revenue of RM219.8 million, in line with order trends from the government sector.

The division will accelerate launches of new products, expand international market presence and increase capacity utilisation via the contract manufacturing business, the company noted.

Its Indonesian division recorded a deficit of RM700,000 due to higher finance costs and increased operating costs.

At yesterday’s closing, Pharmaniaga’s share price settled at 7.92% or 19 sen lower at RM2.21, valuing the company at RM577.32 million.