Aspen Pharmacare (APN) H2 2024 earnings summary

Executive summary

• Achieved record H2 normalised EBITDA, up 17% over H1, with strong operating cash conversion above 100% and successful de-risking of commercial business through regional acquisitions and integration.

• Group revenue grew 10% year-over-year to R44.7bn, led by 25% growth in Manufacturing and 4% in Commercial Pharma.

• Strategic focus on GLP-1s, with new license agreements and positioning for major growth as patents expire globally.

• Heparin business model transition reduced inventory by R2.9bn, supporting cash flow and shifting to a working capital light model.

• Diversified product and geographic portfolio, with strong growth in Latin America and South Africa offsetting Asia declines.

Financial highlights

• Group revenue up 10% to R44.7bn; Manufacturing up 25%, Commercial Pharma up 4%.

• Normalised EBITDA increased 1% to R11.3bn; H2 EBITDA and HEPS up 17%; EBITDA margin at 25.2%.

• Operating cash conversion at 103%, up from 88% prior year; net working capital reduced to 45% of revenue.

• Net debt increased to R26.9bn, mainly due to acquisitions, with leverage ratio at 2.3x.

• Gross profit margin declined to 43.5% (from 46.2%) due to increased Manufacturing mix and VBP impact.

Outlook and guidance

• Double-digit CER revenue growth targeted for Commercial Pharma in FY 2025, with injectables projected to recover to FY 2023 levels.

• Manufacturing revenue to decline in FY 2025 due to heparin unwind, but FDF and sterile contributions to drive EBITDA growth.

• GLP-1 commercialisation expected to benefit results from 2026 onward.

• EBITDA margin anticipated to return to 2023 levels (~27%) as sterile mix increases and heparin declines.

• Leverage ratio projected to fall below 2x; operating cash conversion expected to remain above 100%.