Corporate Briefing Session - 2019 26 th November, 2019 Abbott - - PowerPoint PPT Presentation

Corporate Briefing Session - 2019

26th November, 2019

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Table of Contents

• Company Overview
• Economic Overview
• Financial Results for 2018
• Financial Results for Q3 2019
• Q&A

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Two manufacturing facilities

1,579 Employees > 150 Products

Company Overview

Abbott Laboratories (Pakistan) Limited Incorporated on July 02, 1948 1962 – First manufacturing facility set-up in Karachi 1982 – Listed as a public limited company in Pakistan Pharmaceuticals

Nutritional

Other segments (mainly includes diagnostics and diabetes)

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Pakistan – Macro Economic Overview

Gross Domestic Product Growth (GDP%)

Interest Rate vs. Inflation

Pakistan Economy – Retrospective Keystones

3.60% 3.80% 3.70% 4.10% 4.10% 4.50% 5.30% 5.50% 3.29% 3% 4% 4% 5% 5% 6% 6% 7% 7%

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 (P)

IMF & World Bank Projection for 2020 2.4%

• FY19 GDP growth estimated at 3.29 (decline of 2.2% from prior

year).

• Future outlook for growth bleak – estimated at 2.4% by IMF and

WB.

• Foreign exchange reserves stands at USD 15.4bn (SBP USD 8.4bn

and USD 7bn commercial banks) as of 15th November 2019 against USD 13.7bn (SBP USD 7.3bn and USD 6.4bn commercial banks) same period last year.

• Policy rate hike witnessed in July’19 by 100 bps to 13.25%,

resulting in cumulative increase of 750 bps over 22 months.

• Inflation clocked in at 11.1% (Oct’19 YoY) - Average CPI for

4MFY20 stands at 11.40%.

• Outlook for Inflation in FY20 is expected to remain within the

band of 11% to 12%.

• Workers remittance posted negative growth of -1.82% (USD

7.4bln) in 4MFY20 versus same period last year (USD 7.6bln) – 16.81 growth in 4MFY19 (USD 6.5bln in 4MFY18).

• USD/PKR at 155.40 – Pakistani Rupee devalued by 47% against

USD over past 23 months.

13.75%

11.60%

0% 2% 4% 6% 8% 10% 12% 14%

Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19

Discount Rate CPI Avg CPI for FY

First DR hike in 4 years

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Twin Deficit

Current Account Deficit vs. Exchange rate Rising Fiscal Deficit & Public Debt

78 88 98 108 118 128 138 148 158 168

• 2.5
• 2.0
• 1.5
• 1.0
• 0.5

0.0 0.5 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 CAB(LHS) ER (RHS) 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Public Debt as % of GDP Fiscal Deficit as % of GDP

• Quasi-pegged exchange rate led to overvalued PKR for a

long period in the past.

• Overvalued PKR thereby led to mounting CAD at the

expense of depleting foreign exchange reserves.

• Fiscal deficit via poor tax collection.
• Increased foreign currency loans to support depleting

foreign exchange reserves through CAD led to increased public debt.

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Foreign Exchange Parity

USD/PKR Movement – 47% devaluation over past 23 months

Policy Reforms by SBP

2

Free Float USD/PKR (two way movement observed)

3

Government Borrowing from SBP to Block

4

Devaluation has Improved Trade Deficit

1

Reinstating Central Bank’s Autonomy

• Two way movement in USD/PKR signifying market

driven flexible regime instead of controlled float regime.

• Devaluation in June is cyclical.
• IMF program to regain global confidence in

economic policy.

• Exchange rate adjustment allowed exports volume

growth of 12% in FY19.

5

Deficit Financing at Lower Rate – IMF Borrowing; 1st tranche of $1 bn received in July 2019.

7

IMF 2nd tranche of USD 450 million due next month.

6

USD 500 million received from ADB in August 2019 for budgetary support.

104.83 105.70 110.53 115.01 115.14 119.84 121.47 128.32 133.64 133.99 138.60 138.40 141.40 151.45 164.06 160.05 156.63 155.29 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19

Financial Results - 2018

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Key Highlights – FY2018

• Rs. 29.72bn

Sales Revenue 13.9% Sales Growth 32.9% Gross Profit Margin 9.1% Net Profit Margin

• Overall revenue of the Company

increased by 13.9% reaching

• Rs. 29.72 bn.
• Pharma remains the biggest

segment of the Company followed by Nutrition.

• Decline in profitability mainly on

account of devaluation of rupee and inflation.

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Segment wise Revenue (PKR in millions)

Segment 2018 2017 % growth Pharmaceutical 21,879 19,537 12.0% Nutritional 5,349 4,329 23.6% Others 2,491 2,222 12.1% Total 29,719 26,088 13.9%

Revenue Analysis – FY18

26,088 29,719 24,000 25,000 26,000 27,000 28,000 29,000 30,000 2017 2018

PKR in millions Revenue

13.9%

➢ Pharmaceutical sales increased by 12.0% mainly due to higher

volumes ➢ Sales for Nutrition driven mainly by volume growth in PediaSure and Ensure. ➢ Exports increased by 12% over last year. ➢ Abbott market share as per IQVIA (formerly IMS) was 6.1% for December 2018.

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Segment-wise GP (PKR in millions)

Segment 2018 GP % 2017 GP % Pharmaceutical 7,588 34.7% 7,808 40.0% Nutritional 1,386 25.9% 1,467 33.9% Others 801 32.2% 814 36.6% Total 9,775 32.9% 10,089 38.7%

Segment Gross Profit analysis – FY18

• Segment profitability has been adversely affected
• n account of the following:

 Rupee devaluation;  Increase in prices of raw materials; and  General inflation.

10,089 9,775

• 1,500

3,000 4,500 6,000 7,500 9,000 10,500 12,000 2017 2018

Segment GP

Financial Results – Q3 2019

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Key Highlights – Q3 2019

• Rs. 22.28bn

Sales Revenue 3.2% Sales Growth 28.3% Gross Profit Margin 3.5% Net Profit Margin

• Overall revenue of the Company

increased by 3.2% reaching

• Rs. 22.28 bn.
• Sales growth of the Company has

slowed on the back of overall challenging economic and regulatory environment.

• Decline in profitability mainly on

account of devaluation of rupee and inflation.

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Segment wise Revenue (PKR in millions)

Segment Jan - Sep 2019 Jan - Sep 2018 % Inc / (Dec) Pharmaceutical 15,674 15,834 (1.0%) Nutritional 4,545 3,941 15.3% Others 2,061 1,819 13.3% Total 22,280 21,594 3.2%

Revenue Analysis – Q3 2019

➢ Pharmaceutical sales declined on account of overall challenging

economic and regulatory environment. ➢ Sales for Nutrition driven mainly by increase in sales for child nutrition supplements. ➢ Exports increased by 56% over the same period last year.

21,594 22,280

• 5,000

10,000 15,000 20,000 25,000 Q3 2018 Q3 2019 PKR in millions

Sales

3.2%

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Segment-wise GP (PKR in millions)

Segment

Jan - Sep 2019

GP %

Jan - Sep 2018

GP % Pharmaceutical 4,787 30.5% 5,632 35.6% Nutritional 791 17.4% 1,105 28.0% Others 738 35.8% 581 31.9% Total 6,316 28.3% 7,318 33.9%

Segment Gross Profit analysis – Q3 2019

• Segment profitability has been adversely affected
• n account of the following:

 Rupee devaluation;  Increase in prices of raw materials; and  General inflation.

7,318 6,316

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 Q3 2018 Q3 2019 PKR in millions

Segment GP

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Statement of Profit or Loss – Q3 2019

Description % Jan - Sep 2019 % Jan - Sep 2018 Variance – Favorable / (Unfavorable)

Rupees in millions

%

Sales 100 22,280 100 21,594 686 3 Cost of Sales 72 15,964 66 14,275 (1,689) (12) Gross Profit 28 6,316 34 7,319 (1,003) (14) Selling and Distribution expenses 18 3,927 16 3,489 (438) (13) Administrative Expenses 2 477 2 430 (47) (11) Other income 1 248 2 329 (81) (25) Other charges 2 450 2 480 30 6 Operating Profit 7 1,710 16 3,249 (1,539) (47) Finance costs 35 10 (25) (250) Profit before taxation 7 1,675 16 3,239 (1,564) (48) Taxation 4 903 6 1,168 265 23 Profit after taxation 3 772 10 2,071 (1,299) (63)

• -------------------------------------------- Rupees --------------------------------------

Earnings per share 7.89 21.15 (13.26) (63)

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

EPS Analysis – Q3 2019

7.89 1.93 10.23 4.48 0.48 21.15

• 2.00

4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 22.00 2018 Gross profit Selling and distribution Administrative Others 2019

Rupees

Earnings per share

2019 Increase Decrease 2018 Other charges – lower statutory charges Rs. 0.31 Other income – lower cash balances (Rs. 0.83) Finance costs – increase driven by leases (Rs. 0.26) Taxation – depleting margins Rs. 2.71 Total Rs. 1.93

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Ratio Unit

Sep – 2019 Sep – 2018 Profitability Ratios

Gross profit margin % 28.4 33.9 Net profit margin % 3.5 9.6 Return on Equity % 5.9 16.5 Return on assets % 3.6 11.0

Liquidity Ratios

Current ratio Times 1.74 2.09 Acid test ratio Times 0.68 1.26 Operating cycle Days 45.41 22.48 Inventory Turnover Times 2.79 4.05

Investment Ratios

Earning per share Rupees 7.89 21.15 Price earnings ratio Times 14.87 9.72 Dividend per share Rupees 10.0 40.0 Market value per share Rupees 351.88 617.05 Market Capitalization

• Rs. in Mn

34,449 60,409

Key Financial Ratios

33.9% 9.6% 28.4% 3.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Gross Profit Margin Net Profit Margin

Profit Margins

Q3 2018 Q3 2019

Margins depletion on account

• f Rupee devaluation and

inflation.

2.09 1.26 1.74 0.68 0.00 0.50 1.00 1.50 2.00 2.50 Current Ratio Acid test ratio Times

Liquidity Ratios

Q3 2018 Q3 2019

Abbott Pakistan - Analyst Briefing – Q3 2019

pk.abbott.com

Statement of Financial Position – Sep 30, 2019

Description Sep 2019 Dec 2018 Variance

Rupees in Millions % Non-current assets Property, plant and equipment 8,016 7,192 824 12 Intangible assets 19 25 (6) (24) Long-term loans and advances 54 55 (1) (2) Long-term deposits 8 8

• Long-term prepayments

5 4 1 25 Total non-current assets 8,102 7,284 818 11 Stores and Spares 240 179 61 34 Stock-in-trade 7,722 4,429 3,293 74 Trade debts 869 1,143 (274) (24) Loans and advances 294 147 147 100 Trade deposits and short-term prepayments 616 621 (5) (1) Interest accrued 2 8 (6) (75) Other receivables 555 383 172 45 Taxation – net 889 410 479 117 Cash and bank Balances 1,927 5,678 (3,751) (66) Total current assets 13,114 12,998 116 1 Total Assets 21,216 20,282 934 5

Description Sep 2019 Dec 2018 Variance

Rupees in Millions % Share capital and reserves Issued, subscribed and paid-up capital 979 979

• Reserves – Capital

620 534 86 16 Reserves – Revenue 11,520 11,722 (202) (2)

Total share capital and reserves

13,119 13,235 (116) (1) Deferred taxation 242 255 (13) (5) Long-term lease liabilities 313 174 139 80 Trade and other payables 7,403 6,511 892 14 Unclaimed dividend 51 66 (15) (23) Current maturity of lease liabilities 88 41 47 115 Total liabilities 8,097 7,047 1,050 15 Total Equity and Liabilities 21,216 20,282 934 5

Q & A

Thank you