Cipla bounces back to profit-making territory

ARVs combination drugs on the manufacturing line at Cipla Quality Chemicals plant in Luzira, Kampala. FILE PHOTO | COURTESY By BERNARD BUSUULWA

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Cipla Quality Chemicals Uganda has moved from a loss making position to post Ush5.5 billion($1.5 million) for the financial period ending September 2021.

The company’s rosy financial performance could offer clues to investors about its changing commercial direction under a new chief executive officer, who has been an insider.

Ajay Kumar Pal, former chief operating officer at the company was appointed chief executive officer in July this year following the retirement of Nevin Bradford — a British citizen. The company currently produces Anti-Retroviral (ARV) drugs meant for HIV/Aids patients, tuberculosis, malaria and hepatitis medicines.

While the company recovered from a net loss of Ush21.3 billion ($5.98 million) in September 2020, it recorded profit before tax of Ush5.5 billion ($1.5 million) at the end of September 2021. Its working capital position similarly improved from Ush43 billion ($12 million) to Ush84 billion ($23.6 million) during the same period, according to the company’s latest financial results published last week. The firm’s sales revenues rose slightly from Ush122.6 billion ($34.5 million) in September 2020 to Ush124 billion ($34.9 million) in September 2021, a consequence of a narrow product portfolio, few orders received from clients and minimal debt collection from outstanding sales invoices.

With the exception of new supply orders received from the Democratic Republic of Congo, the company did not register fresh supply orders from existing clients between April and September 2021.

Gross profit margins sharply increased from 8.5 percent in September 2020 to 23.33 percent in September 2021; a trend attributed to aggressive renegotiation of the firm’s procurement contracts signed with raw material suppliers and reduced logistical costs triggered by the recent easing of Covid-19 pandemic lockdown measures.

General and administrative expenses grew from Ush20.6 billion ($5.8 million) in September 2020 to Ush24 billion ($6.7 million) at the end of September 2021. The firm’s basic earnings per share also improved from a negative position of 4.0 to a positive ratio of 0.69 during the period under review. Total assets stood at Ush238.5 billion ($67 million) at the end of September 2021.

However, the company’s cash flow position remained weak during the period under review. Total cash flows slightly improved from a negative position of Ush55.6 billion ($15.6 million) in September 2020 to a smaller negative position of Ush13.8 billion ($3.9 million) in September 2021.

“We obtained a crucial product approval from the Kenyan medical sector regulator during the first six months of 2021/22. Our performance is likely to improve even further by end of March 2022,” said Mr Kumar.