Corporate Briefing Session - 2019€¦ · Abbott Pakistan - Analyst Briefing –Q3 2019 pk.abbott.com Two manufacturing facilities 1,579 Employees > 150 Products Company Overview
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Corporate Briefing Session - 2019
26th November, 2019
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Table of Contents
• Company Overview
• Economic Overview
• Financial Results for 2018
• Financial Results for Q3 2019
• Q&A
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Two manufacturing facilities
1,579 Employees
> 150 Products
Company Overview
Abbott Laboratories (Pakistan) Limited
Incorporated on July 02, 1948
1962 – First manufacturing
facility set-up in Karachi
1982 – Listed as a public limited
company in Pakistan
Pharmaceuticals
Nutritional
Other segments (mainly includes diagnostics and
diabetes)
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Pakistan – Macro Economic OverviewGross Domestic Product Growth (GDP%)
Interest Rate vs. Inflation
Pakistan Economy – Retrospective Keystones
3.60%3.80% 3.70%
4.10% 4.10%
4.50%
5.30%5.50%
3.29%
3%
4%
4%
5%
5%
6%
6%
7%
7%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 (P)
IMF & World Bank Projection for 2020 2.4%
• FY19 GDP growth estimated at 3.29 (decline of 2.2% from prior year).
• Future outlook for growth bleak – estimated at 2.4% by IMF and WB.
• Foreign exchange reserves stands at USD 15.4bn (SBP USD 8.4bn and USD 7bn commercial banks) as of 15th November 2019 against USD 13.7bn (SBP USD 7.3bn and USD 6.4bn commercial banks) same period last year.
• Policy rate hike witnessed in July’19 by 100 bps to 13.25%, resulting in cumulative increase of 750 bps over 22 months.
• Inflation clocked in at 11.1% (Oct’19 YoY) - Average CPI for 4MFY20 stands at 11.40%.
• Outlook for Inflation in FY20 is expected to remain within the band of 11% to 12%.
• Workers remittance posted negative growth of -1.82% (USD 7.4bln) in 4MFY20 versus same period last year (USD 7.6bln) –16.81 growth in 4MFY19 (USD 6.5bln in 4MFY18).
• USD/PKR at 155.40 – Pakistani Rupee devalued by 47% against USD over past 23 months.
13.75%
11.60%
0%
2%
4%
6%
8%
10%
12%
14%
Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19
Discount Rate CPI Avg CPI for FY
First DR hike in 4
years
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Twin Deficit
Current Account Deficit vs. Exchange rate Rising Fiscal Deficit & Public Debt
78
88
98
108
118
128
138
148
158
168
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
Dec
-14
Feb
-15
Ap
r-1
5Ju
n-1
5A
ug-
15
Oct
-15
Dec
-15
Feb
-16
Ap
r-1
6Ju
n-1
6A
ug-
16
Oct
-16
Dec
-16
Feb
-17
Ap
r-1
7Ju
n-1
7A
ug-
17
Oct
-17
Dec
-17
Feb
-18
Ap
r-1
8Ju
n-1
8A
ug-
18
Oct
-18
Dec
-18
Feb
-19
Ap
r-1
9Ju
n-1
9A
ug-
19
CAB(LHS) ER (RHS)
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Public Debt as % of GDP Fiscal Deficit as % of GDP
• Quasi-pegged exchange rate led to overvalued PKR for a long period in the past.
• Overvalued PKR thereby led to mounting CAD at the expense of depleting foreign exchange reserves.
• Fiscal deficit via poor tax collection.
• Increased foreign currency loans to support depleting foreign exchange reserves through CAD led to increased public debt.
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Foreign Exchange Parity
USD/PKR Movement – 47% devaluation over past 23 months Policy Reforms by SBP
2Free Float USD/PKR (two way movement observed)
3Government Borrowing from SBP to Block
4Devaluation has Improved Trade Deficit
1Reinstating Central Bank’s Autonomy
• Two way movement in USD/PKR signifying market driven flexible regime instead of controlled float regime.
• Devaluation in June is cyclical.• IMF program to regain global confidence in
economic policy.• Exchange rate adjustment allowed exports volume
growth of 12% in FY19.
5Deficit Financing at Lower Rate –IMF Borrowing; 1st tranche of $1 bnreceived in July 2019.
7IMF 2nd tranche of USD 450 million due next month.
6USD 500 million received from ADB in August 2019 for budgetary support.104.83 105.70
110.53 115.01
115.14 119.84
121.47
128.32133.64
133.99
138.60138.40
141.40
151.45
164.06
160.05
156.63
155.29
Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19
Financial Results - 2018
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Key Highlights – FY2018
Rs. 29.72bnSales Revenue
13.9%Sales Growth
32.9%Gross Profit
Margin
9.1%Net Profit
Margin
• Overall revenue of the Company increased by 13.9% reaching Rs. 29.72 bn.
• Pharma remains the biggest segment of the Company followed by Nutrition.
• Decline in profitability mainly on account of devaluation of rupee and inflation.
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Segment wise Revenue (PKR in millions)
Segment 2018 2017%
growth
Pharmaceutical 21,879 19,537 12.0%
Nutritional 5,349 4,329 23.6%
Others 2,491 2,222 12.1%
Total 29,719 26,088 13.9%
Revenue Analysis – FY18
26,088
29,719
24,000
25,000
26,000
27,000
28,000
29,000
30,000
2017 2018
PKR
in m
illio
ns
Revenue
13.9%
➢ Pharmaceutical sales increased by 12.0% mainly due to higher volumes
➢ Sales for Nutrition driven mainly by volume growth in PediaSure and Ensure.
➢ Exports increased by 12% over last year.
➢ Abbott market share as per IQVIA (formerly IMS) was 6.1% for December 2018.
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Segment-wise GP (PKR in millions)
Segment 2018 GP % 2017 GP %
Pharmaceutical 7,588 34.7% 7,808 40.0%
Nutritional 1,386 25.9% 1,467 33.9%
Others 801 32.2% 814 36.6%
Total 9,775 32.9% 10,089 38.7%
Segment Gross Profit analysis – FY18
- Segment profitability has been adversely affected on account of the following:
Rupee devaluation;
Increase in prices of raw materials; and
General inflation.
10,089 9,775
-
1,500
3,000
4,500
6,000
7,500
9,000
10,500
12,000
2017 2018
Segment GP
Financial Results – Q3 2019
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Key Highlights – Q3 2019
Rs. 22.28bnSales Revenue
3.2%Sales Growth
28.3%Gross Profit
Margin
3.5%Net Profit
Margin
• Overall revenue of the Company increased by 3.2% reaching Rs. 22.28 bn.
• Sales growth of the Company has slowed on the back of overall challenging economic and regulatory environment.
• Decline in profitability mainly on account of devaluation of rupee and inflation.
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Segment wise Revenue (PKR in millions)
SegmentJan - Sep
2019Jan - Sep
2018% Inc / (Dec)
Pharmaceutical 15,674 15,834 (1.0%)
Nutritional 4,545 3,941 15.3%
Others 2,061 1,819 13.3%
Total 22,280 21,594 3.2%
Revenue Analysis – Q3 2019
➢ Pharmaceutical sales declined on account of overall challenging economic and regulatory environment.
➢ Sales for Nutrition driven mainly by increase in sales for child nutrition supplements.
➢ Exports increased by 56% over the same period last year.
21,594 22,280
-
5,000
10,000
15,000
20,000
25,000
Q3 2018 Q3 2019
PK
R in
mill
ion
s
Sales
3.2%
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Segment-wise GP (PKR in millions)
SegmentJan - Sep
2019GP %
Jan - Sep 2018
GP %
Pharmaceutical 4,787 30.5% 5,632 35.6%
Nutritional 791 17.4% 1,105 28.0%
Others 738 35.8% 581 31.9%
Total 6,316 28.3% 7,318 33.9%
Segment Gross Profit analysis – Q3 2019
- Segment profitability has been adversely affected on account of the following:
Rupee devaluation;
Increase in prices of raw materials; and
General inflation.
7,318
6,316
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q3 2018 Q3 2019
PK
R in
mill
ion
s
Segment GP
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Statement of Profit or Loss – Q3 2019
Description % Jan - Sep 2019
% Jan - Sep 2018
Variance – Favorable / (Unfavorable)
Rupees in millions %
Sales 100 22,280 100 21,594 686 3
Cost of Sales 72 15,964 66 14,275 (1,689) (12)
Gross Profit 28 6,316 34 7,319 (1,003) (14)
Selling and Distribution expenses 18 3,927 16 3,489 (438) (13)
Administrative Expenses 2 477 2 430 (47) (11)
Other income 1 248 2 329 (81) (25)
Other charges 2 450 2 480 30 6
Operating Profit 7 1,710 16 3,249 (1,539) (47)
Finance costs 0 35 0 10 (25) (250)
Profit before taxation 7 1,675 16 3,239 (1,564) (48)
Taxation 4 903 6 1,168 265 23
Profit after taxation 3 772 10 2,071 (1,299) (63)
--------------------------------------------- Rupees --------------------------------------
Earnings per share 7.89 21.15 (13.26) (63)
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
EPS Analysis – Q3 2019
7.89 1.93
10.23
4.48 0.48
21.15
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
22.00
2018 Gross profit Selling and distribution Administrative Others 2019
Ru
pee
s
Earnings per share
2019 Increase Decrease 2018
Other charges – lower statutory charges Rs. 0.31Other income – lower cash balances (Rs. 0.83)Finance costs – increase driven by leases (Rs. 0.26)Taxation – depleting margins Rs. 2.71Total Rs. 1.93
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Ratio Unit Sep – 2019 Sep – 2018
Profitability Ratios
Gross profit margin % 28.4 33.9
Net profit margin % 3.5 9.6
Return on Equity % 5.9 16.5
Return on assets % 3.6 11.0
Liquidity Ratios
Current ratio Times 1.74 2.09
Acid test ratio Times 0.68 1.26
Operating cycle Days 45.41 22.48
Inventory Turnover Times 2.79 4.05
Investment Ratios
Earning per share Rupees 7.89 21.15
Price earnings ratio Times 14.87 9.72
Dividend per share Rupees 10.0 40.0
Market value per share Rupees 351.88 617.05
Market Capitalization Rs. in Mn 34,449 60,409
Key Financial Ratios
33.9%
9.6%
28.4%
3.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross Profit Margin Net Profit Margin
Profit Margins
Q3 2018 Q3 2019
Margins depletion on account of Rupee devaluation and inflation.
2.09
1.26
1.74
0.68
0.00
0.50
1.00
1.50
2.00
2.50
Current Ratio Acid test ratio
Tim
es
Liquidity Ratios
Q3 2018 Q3 2019
Abbott Pakistan - Analyst Briefing – Q3 2019
pk.abbott.com
Statement of Financial Position – Sep 30, 2019Description Sep
2019Dec
2018Variance
Rupees in Millions %
Non-current assets
Property, plant and equipment
8,016 7,192 824 12
Intangible assets 19 25 (6) (24)
Long-term loans and advances 54 55 (1) (2)
Long-term deposits 8 8 - -
Long-term prepayments 5 4 1 25
Total non-current assets 8,102 7,284 818 11
Stores and Spares 240 179 61 34
Stock-in-trade 7,722 4,429 3,293 74
Trade debts 869 1,143 (274) (24)
Loans and advances 294 147 147 100
Trade deposits and short-term prepayments
616 621 (5) (1)
Interest accrued 2 8 (6) (75)
Other receivables 555 383 172 45
Taxation – net 889 410 479 117
Cash and bank Balances 1,927 5,678 (3,751) (66)
Total current assets 13,114 12,998 116 1
Total Assets 21,216 20,282 934 5
Description Sep 2019
Dec 2018
Variance
Rupees in Millions %
Share capital and reserves
Issued, subscribed and paid-up capital
979 979 - -
Reserves – Capital 620 534 86 16
Reserves – Revenue 11,520 11,722 (202) (2)
Total share capital and reserves
13,119 13,235 (116) (1)
Deferred taxation 242 255 (13) (5)
Long-term lease liabilities 313 174 139 80
Trade and other payables 7,403 6,511 892 14
Unclaimed dividend 51 66 (15) (23)
Current maturity of lease liabilities
88 41 47 115
Total liabilities 8,097 7,047 1,050 15
Total Equity and Liabilities 21,216 20,282 934 5
Q & A
Thank you
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