No Early Harvest for Caps Holdings

CAPS Holdings chairman Fred Mtandah sees a brighter outlook for the pharmaceutical group. But investors would be excused for being apprehensive about the company’s “low share” price hovering around US$0,2c and “not so pleasing interim results”.


 “The half year to June 30 presented mixed fortunes for the group,” Mtandah said. “It brought significant changes to the macro-economic environment.”
Analysts however said to understand the Caps Holdings’ story better, it would be prudent to look more into the future than the past.
And if there is one company
that does not want to hear about the Zimbabwe dollar it is Caps Holdings.
“The demonetisation of the Zimbabwe dollar and the introduction of a multi-currency system rendered our Zimbabwe dollar bank balance valueless. This resulted in business having to start from an almost zero working capital,” said Mtandah.
During the period under review the group achieved a profit after tax of US$272 397 million from US$586 486 reported during the same period last year.
The group’s total assets are US$63,8 million from US$64, 3 million which was on the group’s books last year. The group’s turnover was US$4,8 million from US$4,2 million posted last year.
For some analysts Caps Holdings figures have shown that there is no-substitute to foresight and strategic planning, however turbulent the operating environment can be. However as Aids and Swine Flue migrate from being a killer condition to a manageable one, requiring consistent medication, Caps Holdings will be a company to watch in future.
Caps Holdings is the largest vertically integrated pharmaceutical company in Zimbabwe involved primarily in the procurement, manufacturing and distribution of pharmaceutical, veterinary and consumer products.
Mtandah said the group’s manufacturing capacity utilisation has been increasing on a monthly basis.  
“In order to fully unlock the full production potential of the factory, pieces of equipment in the parking area have been ordered and delivery is expected towards the end of the fourth quarter,” he said.
He said the strong demand that exists locally and regionally would be fulfilled.
The group’s distribution and retail operations faced challenges for the better part of the first quarter as a result of various factor including lack of working capital.
“The level of deterioration required a major re-engineering of the business model. This process is still on-going,” Mtandah said.
Towards the middle of the second quarter, sales volumes began to increase. Mtandah said management was confident that these businesses would post improved results in the second quarter.
The group’s hospital had a consistent growth in turnover in comparison to the same period last year.
“Bed occupancy is still low. However an enormous growth on a monthly basis is being witnessed. The implementation of the Accident and Emergency unit is progressing very well. The future for this business looks very bright,” he said.
During the period under review, there has been an increase in product supply to these markets. Management is working on plans to ensure that product supply will increase to other countries like Malawi and Zambia.
Going forward, Mtandah said the group would continue to create wealth for its shareholders by strategically making use of opportunities locally and regionally using existing and new networks.
“The stocks levels in the wholesale division are set to improve in the second half of the year. This will filter through to improving stocking of the retail and hospital business. Retooling of the factory will continue in the second half of the year,” he said.

 

Paul Nyakazeya

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