Adcock posts R38m loss

Adcock Ingram, South Africa's biggest supplier of hospital products, has posted a first-half loss after writing off expenses related to the failed takeover attempt by the South American CFR Pharmaceuticals.

The company also cited under-pressure margins.

The loss of R37.9-million in the six months to the end of March compares with a restated profit of R323.4-million a year earlier, the company said yesterday.

Sales climbed to R2.43-billion from R2.36-billion.

"The poor operational performance for the reporting period is regrettable," the company said.

The "drawn out and exacting" CFR bid "preoccupied certain key managers and they, together with the board of directors, became embroiled in the demands of these events".

CFR, Chile's biggest drugsmaker, called off its R12.8-billion cash and stock offer on February 7 after Bidvest built up a blocking stake.

The CFR deal valued each share at R74.50 to R75.78 and was supported by Adcock's board.

Bidvest CEO Brian Joffe became Adcock's new chairman after a 10-month fight for control of the company. Kevin Wakeford was appointed CEO last month.

Sales were affected by "a sharp slowdown in the over-the-counter and prescription generics", the company said.

Costs related to CFR's dropped bid were R91-million in the six months, Adcock said.

The stock has slumped 16% this year, compared with a 4.2% gain for Aspen Pharmacare, Africa's biggest generic drugs maker.

Adcock's new management "now have a sound understanding of the immediate market, and of the staffing and regulatory environment", it said.

The weaker rand raised the cost of imported ingredients, and sales recovery and margin pressure are a concern in the short term, Adcock said.

The Department of Health's approval of a 5.8% increase in the single exit price was "insufficient" to offset the effect of the weak rand on ingredients, wages and inflation, it said.