The year was characterised by constrained consumer spending, exchange rate fluctuations that affected certain businesses, the impact of people working from home, disruption in the education sector, the lack of a flu season, as well as supply chain challenges.
The early rightsizing and re-engineering of the businesses, together with the impressive cost control, has been the ultimate key to this year's good results. Cash generation was outstanding.
Adcock Ingram, which is the largest contributor to trading profit, naturally experienced uncertainty and volatility with regard to demand patterns. It still managed a healthy increase in sales albeit at a lower gross margin, due largely to a weaker exchange rate, lower factory recoveries and the product mix. There was a decline in the OTC business unit, but the Consumer, Prescription and Hospital divisions were all up on the prior year. Plush and the Roche renal portfolio were integrated into the business, and Adcock Ingram also acquired a portfolio of generic products from Aspen, as well as the remaining 51% share of Novartis Ophthalmics.
The print, packaging and electronic products businesses delivered excellent profit growth, following a significant restructure and excellent expense control. There was pleasing demand in the packaging market with increases from the online shopping and food products sectors. There was solid demand for labels and electronic printing, but print-to-post volumes dropped.
The office products cluster was marginally up with retail sales resilient, but overall sales were impacted by low occupancies as clients' work from home policies remained in place. Despite this obstacle, Bidvest Waltons delivered a good performance.
The consumer products cluster delivered good trading profit driven by demand for basic essential products, with online channels showing growth.
Looking forward
Demanding trading conditions are expected to continue into the next year, and the continued work-from-home challenge will persist for some time.
As a result, and following the significant restructuring that has taken place within the division, strategic attention has turned to productivity, revenue growth, continued simplification of business structures and the seeking of appropriate acquisitions.
Adcock Ingram remains committed to expanding its product range in each of its business units.
