Harare – Local pharmaceuticals manufacturer, Medtech Holdings Limited has reported a total comprehensive profit of $1.0 million for the year ended 31 December 2018, representing an improvement of 116 percent from $479 216 in 2017 buoyed by revenue growth in its FMCG segment.
The company reported a growth of 11 percent in revenue to $12.3 million in the period under review compared to $11.1 million achieved in the prior period driven price increases as sales remained restricted, while gross profit jumped by 163 percent to $7.5 million from $2.9 million in 2017.
“However, sales had been restricted so as to preserve shareholder value due to the uncertainty in the operating environment with the main factors being rising inflationary pressures and foreign currency constraints,” the Group chairperson Rose Mazula said in a statement accompanying the audited financial results.
In the period under review, operating profit increased by 2472 percent to $4.6 million compared to $179 552 in the prior 2017 period.
Revenues from the Fast-Moving Consumer Goods (FMCG) segment which includes MedTech Distribution, Smart Retail and Choice Brands increased by 26 percent to $10.1 million from $8.0 million in 2017, accounting for 82 percent of total revenue while revenues from the Medical segment declined by 160 percent from $726 457 in 2017 to $279 442 in the period under review.
“Segment sales declined 160% as stock levels remained low due to foreign supplies maintaining their stance of cutting lines of credit as a result of inability by banks to remit foreign payment,” Mazula said.
Medical Segment group includes MedTech Medical and Scientific Pvt Ltd and Education and Laboratory Services division including laboratory services.
Likewise, the Medical Segment posted a loss before tax of $32 367 while FMCG Segment posted a profit before tax of $1.2 million.
Meanwhile, the manufacturing segment recorded a decline of 13 percent in revenue from $3.2 million in 2017 to $2.8 million in the period under review attributed to changes in consumer spending patterns where consumers shifted from larger to smaller pack sizes.
“Another reason for decreased revenue is due to increased competition from smuggled products,” Mazula said.
On the outlook, Mazula said the Group anticipates continued delays in remitting of foreign payments and this will negatively affect the group’s ability to service existing foreign creditors amounting to ZAR27.7 million.
“This may lead to cuts in supply and resultant stock outs,” Mazula said.
Equity Axis News
Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment.