A strong rise in domestic sales and licensing revenue has seen Auckland based drug marker AFT Pharmaceuticals post a much improved half year result.
AFT's product sales rose by 15 percent and 32 percent in the domestic and Asian markets respectively. Photo: 123RF
The company produces the over-the-counter (OTC) pain relief medication, Maxigesic.
Key numbers (first half ended September versus a year ago)
- Net profit 4.2 million vs $1.2m
- Revenue $55.5m vs $48.8m
- Net debt $32.6m vs $35.2m
"Covid-19 has represented a continuing headwind to our progress over the half year," AFT chair David Flacks said.
"Nevertheless, we have still delivered a strong improvement in revenue and earnings."
Much of this was the result of a sharp increase in licensing income generated from international markets, rising from $300,000 to $4.8m.
Product sales rose by 15 percent and 32 percent in the domestic and Asian markets respectively.
However, sales in the Australian market were subdued by comparison, up only 2 percent, as trading was hampered in the short term by lockdowns, delayed launches and supply chain constraints.
AFT managing director Hartley Atkinson said international markets and particularly Europe, had similarly been affected by the pandemic - with product sales down by a third.
"But the impact on AFT's financial results appears greater because the prior half year result benefited from licensees buying stock to fill their distribution networks," he said.
Over the year, the company had managed to reach licensing agreements and take its product to the US, European and South American markets.
Despite the positive steps the company had taken in the past 12 months, it had not been without its challenges.
"Rising product and distribution costs that have not yet all been passed on to customers have weighed on international margins," Atkinson said.
Closed borders had also affected the company's ability to conduct in-person negotiations with potential clients.
"However, there is a silver lining in Covid-19 whereby we have used the time gained from less travel to significantly upscale our in-licensing operations and consequently, we now have plans to launch more than 30 new products in Australasia over the next 18 months."
The company reaffirmed its guidance for the current financial year, forecasting earnings of between $18m and $23m.
"The second half of the year is traditionally stronger for AFT Pharmaceuticals, and we expect no change to this trend in the current year, especially as there are a number of launches initially planned for the first half that have been delayed and will now take place in the second half of the year."