Karachi, November 04, 2021 (PPI-OT): AGP: Briefing session key takeaways
AGP Limited held a briefing session yesterday to discuss 3QCY21 results and outlook of the company. We present key takeaways from the session.
AGP acquired Sandoz brands during the last quarter through a special purpose vehicle OBS AGP (Pvt) Ltd. It has 22 brands out of which 4 are market leaders namely Azomax, Zatofen, Clomfranil and Lectrum. The business has started on a positive note and achieved revenue and net profit of Rs 745mn and Rs 387mn, respectively with gross margin clocking in at 52% for the quarter.
Transfer of Marketing Authorizations is under process after the completion of which significant increase in the consolidated revenues of AGP is expected. Supplies for the first 6 months for Sandoz are covered by Novartis. AGP plans to manufacture majority of the products and only around 20% of the products will be arranged through vendors.
The company plans to capitalize on the recent acquisition of Sandoz brands and expects its consolidated revenue to increase to Rs 10bn in the next 12 months.
The company faced dampened sales during the period due to dull exports to Afghanistan and lower institutional sales.
Devaluation of Pak Rupee will be partly mitigated by annual CPI linked increment under DRAP policy. 80% of AGP portfolio and 90% of Sandoz portfolio is inflation hedged, company does have to absorb the impact of inflation on the rest.
The company has no more hardship cases as all cases have been resolved.
Out of the imported raw materials, 70% is imported from China while the remaining 30% is imported from India. Power cuts in China were a key challenge faced by AGP during the outgoing quarter which led to volatile transit times. The company plans to mitigate higher freight costs, which rose 2-3 times during the year, and avoid shortage of raw materials by locking in early orders to avoid shortage of materials.
Average annual CAPEX has been Rs300-400mn but this year due to the addition of Sandoz portfolio it is expected to be Rs600mn+. Going forward it will normalize at ~Rs500mn/annum.