- Third quarter revenue achieves quarter-on-quarter growth of 1.03% as operational costs and industry-wide challenges continue exerting pressure on profit recovery
KUALA LUMPUR, 8 NOVEMBER 2023 – Duopharma Biotech Berhad (“Duopharma Biotech” or “the Company”) saw recovery in its quarter-on-quarter sales in the third quarter of financial year 2023, ended 30 September 2023 (Q3FY2023) with revenue of RM169.24 million, an increase of 1.03% compared to RM167.52 million in the preceding quarter, boosted by sales growth in the private prescription pharmaceutical market, ethical specialty sector and the export segment. Meanwhile, Profit Before Tax (PBT) and Profit After Tax (PAT) for Q3FY2023 stood at RM11.43 million and RM8.97 million respectively.
At the same time, the year-to-date (YTD) revenue in Q3FY2023 of RM537.23 million lagged the corresponding period last year by 1.38%, with the Company’s improved quarterly performance dampened by a decrease in demand from the consumer healthcare sector and the prolonged impact of increased operational costs as well as a one-off loss associated with mutual termination of an agreement to sub-lease in respect of a parcel of vacant leasehold the land exerting pressure on manufacturing margins and impacting overall profitability. In the first three quarters of 2023, the cumulative PBT stood at RM56.23 million with PAT at RM44.14 million.
The increased costs include the upward adjustment in electricity tariff, elevated labour cost pursuant to amendments to the Employment Act 1955, higher finance costs due to the rising Overnight Policy Rate (OPR), incremental costs associated with the commencement of production in the new K3 facility, and unfavourable exchange rates.
Duopharma Biotech Group Managing Director Leonard Ariff Abdul Shatar said, “Duopharma Biotech’s gradual revenue recovery augurs well in the longer term, as we continue to strengthen our portfolio with high-value innovative offerings and niche products, with a focus on the Ethical and Consumer Healthcare segments, while weathering persistent industry-wide challenges. We are also heartened by the Government’s commitment to healthcare funding, with a record allocation of RM41.2 billion in Budget 2024. The 13.5% increase in funding will undoubtedly enable essential reforms in the healthcare system, thus stimulating demand growth for pharmaceutical supplies.”
Duopharma Biotech currently holds a three-year contract worth RM375 million to supply Insugen-Insulin Recombinant Human Formulations to the Ministry of Health’s facilities from 29 April 2022 to 28 April 2025. Meanwhile, the Company’s contract to supply pharmaceutical and/or non-pharmaceutical products to Government healthcare facilities under APPL 2017-2019 that expired on 30 June 2023 has been further extended for another six months to 31 December 2023.
In Q3FY2023, the Group paid out an interim dividend of 0.5 sen per share (2022: first interim dividend of 0.5 sen per share) equivalent to RM4.81 million (2022:RM 4.76 million) in respect of financial year ending 31 December 2023. The Board of Directors did not recommend any interim dividend for the current quarter ended 30 September 2023. (2022:Nil)
In the third quarter, the Company established an Islamic medium term notes programme for the issuance of Islamic medium term notes (“Sukuk Wakalah”) of up to RM2.0 billion in nominal value based on the Shariah principle of Wakalah Bi Al-Istithmar (“Sukuk Wakalah Programme”) for a 30-year programme tenure. Following this, the first issuance under the Sukuk Wakalah Programme amounting to RM364.0 million was made on 29 September 2023.