South Africa—Aspen Pharmacare, South Africa’s biggest pharmaceutical manufacturer on Wednesday delivered news to shareholders, announcing that it would reinstate dividends after cutting debt to below the levels as required by its lenders.
Shareholders will be paid a dividend of 262c a share, and future distributions on a year-by-year basis will be considered.
The group’s normalized earnings before interest, taxes, depreciation and amortization (Ebitda) for the year came in 3% higher year on year at R9.9 billion, as a lower gross profit percentage and reduced other operating income was partially offset by controlled operating expenses.
Aspen reported a 12% increase in revenue to R37.8bn, compared to R33.7bn the year before. Normalized headline earnings a share increased by 10% year on year to R13.10.
Aspen scrapped dividend payments in 2019, before Covid-19, due to the huge debt pile it acquired during a series of acquisitions that diversified the company beyond its historic generics base.
It continued to withhold dividends in 2020 as it refocused the business and sold assets to reduce its debt, and in common with companies across a wide range of companies sought to preserve capital in the face of the business uncertainly created by the pandemic.
Aspen’s net debt fell by more than half during the year to June 30 to R16.3bn, compared to R35.2bn the year before. The reduction in borrowings was driven by the sale of Aspen’s European thrombosis business, strong operating cash flows, and a stronger rand relative to the euro and Australian dollar at year-end.
Aspen said it had been able to provide a reliable supply of its medicines and products despite the challenges thrown up by Covid, but sales of its specialist anesthetic products have been volatile because elective procedures were deferred when infections surged, even as demand for products used to treat Covid-19 patients rose when cases mounted.