AFT Pharmaceuticals reported annual operating profit near the top end of guidance and is forecasting underlying growth of up to 58 per cent in the current year.
"Some people see us as a Covid stock, but I don't think we are. We're just navigating around it like everyone else," managing director Hartley Atkinson told the Herald.
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Regardless, sales of a number of products, including analgesics, cold and flu medications, vitamins and hospital antibiotics all increased strongly over the March quarter as the coronavirus outbreak unfolded.
And the company's new products, such as its Crystawash hand sanitiser, to cater to Covid demand.
Recession is a certainty in the months ahead, but Atkinson reiterated that demand for pharmaceuticals has a history of remaining steady during downturns. "After the GFC, sales just carried on," he said.
In January, as Covid-19 first appeared on the world's radar, concern about supply chains saw AFT made the decision to increase stockpiles to 50 days' supply of ingredients.
Hartley said the decision had paid off. In the event, there was little disruption to the manufacture of key drug ingredients, but the stockpiling and attendant longer lead times meant AFT could, for the most part, retain its traditional focus on cheaper sea freight over air freight - which has become even more expensive (and patchy) during the outbreak.
Covid did cost the company more than $1m of export orders, including launch orders for 10 countries, which were held up by the Indian government temporarily restricting any exports of products containing paracetamol – the ban has since been lifted but these sales will now fall in the current year.
His company is now one of the minority who can provide any guidance for FY2021 - let alone predicting an uptick.
AFT is forecasting underlying operating profit this year will come in between $14m and $18m, up from $11.4m in the year just gone.
Hartley said concerns about a possible second wave of Covid-19 had recently seen AFT decide to extend its 50-day stockpile rule.
Meantime, the end of level 3 is, to be blunt, good for AFT's core business.
"As we come out of lockdown in both Australia and New Zealand, then people will mix again more and, be honest, catch more colds and viruses than when stuck at home," Atkinson says.
The bulk of AFT's 2020 revenue came from NZ ($30.1m) and Australia ($61.4m).
Signing more international licensing deals remains the key avenue to future growth.
"With the Covid situation, that definitely slowed down in the US," Hartley says. "But we're now back in discussions in the US, and that includes term sheets. It's pleasing that we're making progress with more than one party."
Talks are underway in Europe as well. Timing is hard to predict, Atkinson said, "But we would definitely anticipate making further licensing announcements this year."
Whatever does arrive will be gravy. The forecast does not include any revenue from new licensing agreements.
AFT, which owns the Maxigesic brand of tablets combining paracetamol and ibuprofen and related products, reported a bottom-line profit of $12.7m for the 12 months ended March compared with a net loss of $2.4m the previous year.
Operating profit, which includes a one-off $9.8m gain, rose to $21.2m compared with guidance of $18.8m to $21.8 million – the company said in early March the outcome was likely to be at the higher end - compared with $6.1m the previous year.
"Company sales in the first month of the new financial year are significantly ahead of the prior year, despite the sluggish retail environment," the company said.
AFT shares jumped as high as $5 from $4.72 yesterday but are currently down 8 cents, or 1.7 per cent at $4.64. However, they are still up 32.6 per cent year to date.
Atkinson said all operating divisions performed well and that the growth was achieved as the company maintained tight control on costs.
Another notable achievement in the year just gone was that AFT's cashflow from operations rose to $14.9m from $1.1m the previous year.
In the company's largest market, Australia, sales rose 22.1 per cent to $61.4m while sales in NZ rose just 12.4 per cent to $30.1m.
Sales to Southeast Asia more than doubled to $4.9m from $2.1m while rest-of-world sales jumped 55.2 per cent.
The company's push beyond Australasia is spearheaded by Maxigesic which is now sold in 43 countries, up from 20 in the 2019 financial year. The company is forecasting that will jump to 66 countries this year and to 125 in 2022.
On March 31, AFT refinanced a $43.2m debt facility, which had been provided by US-based healthcare investor CRG at an effective interest rate of 13.7 per cent, with Bank of New Zealand at an 8.48 per cent effective interest rate.
With reporting by BusinessDesk