Abbott Laboratories sustains Rs580mn in losses amid inflation, currency devaluation

Pakistani pharmaceutical company Abbott Laboratories suffered losses to the tune of Rs579.85 million in the second quarter which ended June, 30, 2023, as compared to a profit of Rs338.2 million in same period last year (SPLY).

The company, in its financial statements provided to the Pakistan Stock Exchange (PSX) on Wednesday, attributed the losses to a rise in production cost amid ongoing rupee devaluation and rise in inflation.

The company posted a loss per share of Rs5.93 in Q2 2023, as compared to an earning per share of Rs3.45 per share in SPLY.

Sales for the quarter clocked in at Rs13.44 billion, an increase of 4% over the SPLY.

“Pharmaceutical sales increased by 12% whereas sales for nutrition decreased by 18% mainly on account of lower volumes following restrained demand due to inflationary pressures,” said Abbott.

However, despite higher sales the pharmaceutical’s gross profit margin declined to 19% in 2QCY23 from 34% during the SPLY.

“This is mainly due to increase in product costs on account of rupee devaluation and inflation,” stated the company, as the cost of sales increased to Rs10.84 billion from Rs8.53 billion in SPLY.

Operating expenses increased by 16% over the same period last year mainly due to inflation. Other charges decreased by 82% over the same period last year due to impact of exchange losses in 2QCY22.

Abbott’s tax charge for the quarter decreased by 44% to Rs971.72 million as compared to 1.729 billion in SPLY. “This is in line with lower profitability and impact of prior year super tax levy in 2QCY22,” said the pharmaceutical.

Abbott stated it continues to face challenges of inflation and rupee devaluation.

It urged the Drug Regulatory Authority of Pakistan to conduct necessary pricing review and adjustments.

“As a long-term measure, the Authority may consider introducing automatic mechanism and policy to offset the impact of devaluation,” it suggested.