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Gulf Pharmaceutical Industries (Julphar), one of the region's biggest drug manufacturers, posted lower net profit for the second quarter of the year despite nearly doubling its sales.
Net profit for the period reached AED5.2 million, compared with AED73.4 million in the same period last year. The drug manufacturer had recently made a turnaround with a net profit of AED65 million for 2021, following years of losses.
In a statement on Friday, the Abu Dhabi-listed firm said that geo-economic headwinds have impacted year-to-date and quarter-on-quarter sales in certain markets such as Algeria, Ethiopia and Morocco. Its newly acquired distribution business, Plant Pharmacies, has also posted lower margins.
However, Julphar pointed out that operations and productivity in the affected markets "have remained consistent", with organic growth from segment operations rising by 10%.
Overall, results remained "robust", with net sales for the second quarter reaching AED419.9 million, up by 91% compared to a year earlier.
EBITDA from continuing operations reached AED44.2 million, marking a return to a double-digit margin of 10.5% of net sales. Gross profit margin for the period reached 34%.
Analysis
"The operational performance of the company has shown a strong and continued positive trend while overcoming geopolitical challenges which is evident by the increase in net sales," the drug manufacturer said in a separate analysis. It said that the Group's gross margins were affected by Planet's lower gross margin on distribution business.
Financial results of Planet, a regional pharmaceutical distributor that the company had acquired last year, were fully consolidated in Julphar Group from July 2021.
According to Sheikh Saqer Bin Humaid Al Qasimi, Chairman of the Board, the company successfully concluded its turnaround plan in the first quarter of 2022, leading to "robust" results.
"As we look towards the second half of the year, Julphar is in a position of strength and is well placed to achieve sustainable growth in line with its Strategic Objectives 2030," he said.
(Reporting by Cleofe Maceda; editing by Daniel Luiz)
