Julphar narrows second quarter loss through improved sales

The company is aiming to regain a 'leading market position' in Saudi Arabia, Kuwait and Oman as an export ban on its products is lifted

Bottles are packed by a worker at Julphar facility in Ras Al Khaimah.  The company narrowed losses for the second quarter on the back of higher revenue and lower expenses. Pawan Singh / The National

Gulf Pharmaceutical Industries (Julphar), one of the biggest drug manufacturers in the Middle East and Africa, narrowed losses for the second quarter by 78 per cent on the back of higher revenue.

The company's net loss attributable to equity holders for the three months ending June 30 fell to Dh20.7 million from Dh94.8m for the prior year, the company said in a statement to Abu Dhabi Securities Exchange, where its shares trade.

Revenue for the quarter rose 90 per cent year-on-year to Dh169.7m, while selling and distribution expenses dropped 15 per cent to Dh57.8m. General and administrative expenses, on the other hand, climbed 58 per cent to Dh30.9m.

“The decrease of the net loss during the quarter and the first half 2020 is achieved due to the substantially increased net sales, expense reduction and gross margin improvement. In addition, the previous year period included one-time expenses for penalties [and] provision for inventories,” Julphar said on Wednesday.

Founded in 1980, Julphar distributes pharmaceutical products to more than 50 countries on five continents. It has 16 manufacturing facilities in Africa, the Middle East and Asia.

Revenue rose as Saudi Arabia, Oman, Kuwait and Bahrain lifted a temporary suspension on the import of Julphar's products following inspection by relevant authorities, it added.

Saudi Arabia banned the sale of Julphar's products in 2018 for failing to meet regional standards. However, the ban was lifted in April following a “successful inspection of its manufacturing facilities”.

In the first half, the company narrowed losses by 55 per cent to Dh83.2m as revenue jumped 37 per cent to Dh274.1m.

The company said the Covid-19 pandemic represents considerable uncertainty as “product demand is negatively affected in product areas related to elective treatment procedures”.

“However, this also represents an opportunity for Julphar to reposition itself in [the] GCC as a leading healthcare provider by providing affordable medicines to governments and hospitals and addressing the increased demand in Covid-19-related medication.”

Julphar recently completed a recapitalisation which saw it extinguish accumulated losses by cancelling Dh503m worth of shares and then completing a rights issue to raise Dh500m through the issue of new shares. The company said the issue completed last month and was 2.3 times oversubscribed.

It plans to use proceeds on a growth strategy that will focus on re-entering markets in Saudi Arabia, Kuwait and Oman and regain a "leading market position", the company said. It will also look to enter into new alliances and partnerships to strengthen its product portfolio and invest in capital expenditure to improve the efficiency of its operations. Divestments of non-core business units are also being planned.