Revenue for the quarter increased 11.51% to RM848.73 million from RM761.1 million a year ago, driven by higher sales in both the non-concession segment and operations in Indonesia, it said in a filing with Bursa Malaysia today.
“This positive trend in both segments contributed to the overall revenue growth and demonstrates the effectiveness of our market penetration and expansion efforts,” it said.
Its Indonesian businesses generated revenue of RM250.2 million in Q2 versus RM224.1 million in Q1 FY2023.
However, on a quarter-on-quarter (q-o-q) basis the Practice Note 17 (PN17) company’s net profit dropped 25.94% from RM2.65 million in Q1 FY2023 on lower contributions from its concession business with the health ministry (MoH) during the festive season. Revenue slipped 3.6% q-o-q from RM880.45 million.
No interim dividend was declared for the quarter.
For the first half ended June 30 (H1 FY2023), Pharmaniaga’s net profit plummeted 83.8% to RM4.61 million from RM28.46 million in the corresponding period a year ago.
“This decrease was due to higher operating expenditure incurred from increased staff costs as a result of increased headcount, coupled with higher amortisation cost for the right-of-use for three new warehouses,” it said.
Pharmaniaga added the bottom-line was further impacted by higher finance costs due to increased borrowings during the period although revenue had risen marginally by 0.34% to RM1.73 billion in H1 FY2023, citing its non-concession business proving to be a major growth driver.
Extensive business restructuring
In a separate press release today, the group said it is embarking on an “extensive business restructuring” exercise that includes implementing rigorous fiscal discipline initiatives across its operations as part of its comprehensive recovery plan.
Chairman Izaddeen Daud said integral to this effort is Pharmaniaga’s measures to clean up the books, strengthen the governance and internal processes to ensure transparency in all its business activities.
He added the group is undertaking a comprehensive review of all business segments including restructuring non-performing business units, streamlining business activities, optimisation of manpower and asset utilisation.
These initiatives may lead to adverse one-off financial impact in the upcoming quarters, he warned.
“It will be a challenging and bumpy period for the group, but this strategic move will uphold our business integrity and foster a more agile, efficient, and sustainable operational model.
“The ultimate goal is to present a transparent, realistic, and detailed recovery plan, which will set a clear path for restoring its profitability, maintaining its position in the industry, and ultimately, creating value for shareholders,” he added.
Submission of PN17 regularisation plan
Additionally, Izzadden said Pharmaniaga is working towards resolving its PN17 classification and is on track to submitting its regularisation plan by Q3 FY2023.
The group slipped into the PN17 status on Feb 27 this year after booking provisions of RM552.3 million for unsold Covid-19 vaccines which resulted in negative equity in its balance sheet. Its capital deficiency stood at RM119.19 million, according to an earlier filing.
In July, the company secured a new seven-year concession to provide medical supply logistics services to MoH.
Its largest shareholder is Boustead Holdings Bhd, which has a 52% stake. Boustead is being taken private by the Armed Forces Fund Board (LTAT), which now controls a 97.63% stake in the conglomerate.
At the closing today, its share price was higher by half-a-sen or 1.18% at 42 sen, giving it a market capitalisation of RM605.32 million.