No matter how tight the regulatory conditions may be for pharmaceutical players, a player as big as GlaxoSmithKline Pakistan (KSE symbol: Glaxo) has less to worry. Even in the toughest times, CY14 turned out to be a phenomenal year for Glaxo with its bottom line boasting a rise of 59 percent year-on-year. This is by-far the highest ever profitability growth level achieved by the company over a six-year period.
From top to bottom, its financial standing looks flawless. Dominating market share, blooming top line, expanding margins, controlled expenses would perhaps be the primary financial goals of any firm and Glaxo has achieved them all. Besides, the favourable product mix, places the company in a relatively comfortable position.
Interestingly, Glaxos top line growth is in double digits once again. Recall that the preceding two years had been relatively slower for the firm. Yet, given the unfriendly pricing restrictions, the company did not fall; it kept on growing which is not an ordinary feat.
More pleasing is the fact its margins have gone up during the year. Perhaps, it looks like the company made the most of currency appreciation by importing raw materials in advance, thereby bringing down its input costs during the year. Also, diversification in product mix is likely to have contributed to margin expansion. The company is focusing on strengthening its consumer healthcare business which constituted 17 percent to the total revenues as of September 2014. The financial result was accompanied with a cash dividend announcement of Rs5 per share for its shareholders.
All in all, Glaxo is aiming high and its plans are far-reaching. Yesterday, Competition Commission of Pakistan gave the go-ahead to GlaxoSmithKline to proceed with the acquisition of global vaccines business (excluding influenza business) of Novartis AG. This is likely to further strengthen Glaxos market standing.
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GlaxoSmithKline Pakistan
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Rs (mn) CY14 CY1 3 chg
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Sales 27,883 25,230 11%
Cost of sales (20,537) (19,002) 8%
Gross profit 7,346 6,228 18%
Selling & distribution expenses (3,695) (3,625) 2%
Administrative expenses (1,020) (936) 9%
Other expenses (253) (153) 65%
Other income 491 455 8%
Profit from operations 2,869 1,969 46%
Finance cost (20) (159) -87%
Profit before taxation 2,849 1,810 57%
Taxation (1,161) (748) 55%
Profit after taxation 1,688 1,062 59%
EPS (Rs.) 5.30 3.34
Gross margin 26% 25%
Net margin 6% 4%
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Source: KSE announcement
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