Cipla Quality Chemical Industries Ltd warned Wednesday that its profit for the half year to September would drop because last year’s rise in profit for the same period was the result of the recovery of a previously written-off trade receivable from the Zambian government.
The drugmaker added that changes in its product mix will also lead to a decline in gross margins.
Cipla reported a profit of Shs13.8bn for the six months to September 2022, up from Shs2.8bn in the same period the previous year, after recovering Shs9.4bn in impaired receivables from the Zambian government. In total, the company received Shs14.7bn to settle the impaired debt in the year to March, leaving Zambia with an outstanding balance of Shs6.9bn.
Despite a 3 per cent decline in sales in the half year to September 2022 — reported at Sh120bn — the company increased gross profit by 26 per cent to Sh36.5bn by reducing cost of sales by 12.4 per cent to Sh83.5bn.
Africa Capitalworks Holdings, a Mauritius-based fund, recently acquired a majority stake in the company from Meditab Holdings Ltd and Cipla Eu Ltd, both owned by India’s Cipla Group. To manage its stake, Africa Capitalworks set up a separate vehicle, Africa Capitalworks SSA 3, which holds 47.3 per cent of the drugmaker’s shares. The remaining 4.5 per cent stake is held by the three Ugandan co-founders through the Africa Capitalworks vehicle, bringing Africa Capitalworks SSA 3’s stake to 51.8 per cent.
The stock closed at Shs70 on Wednesday, unchanged from the opening price. It is up 16.7 per cent for the year.
