Hyphens Pharma books provision for unsold Covid-19 test kits; Q3 profit halves

HYPHENS Pharma International's net profit shrank by 53 per cent to S$847,000 for the third quarter, from S$1.8 million a year ago.

This was even as revenue inched up by 2.4 per cent year on year to S$31.4 million, from S$30.7 million.

The drop in the bottom line was mainly due to higher expenses, the pharmaceutical and consumer healthcare group said in results released on Wednesday night.

Other losses jumped by S$600,000 to S$900,000 in the third quarter, mainly due to higher allowance for inventories obsolescence and foreign exchange loss. This was partially offset by lower inventories written off.

The allowance for inventories obsolescence was made in relation to diagnostic test kits for Covid-19 under the medical hypermart segment, as well as on medical hypermart inventories due to low demand for some items with a short shelf life, such as flu vaccines.

The group had made prepayments to secure orders of Covid-19 diagnostic test kits during Singapore's "circuit breaker" which started in April, to sell in the Republic, in anticipation of widespread testing in private clinics.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

However, it was later determined that testing for the novel coronavirus will entirely be centrally managed, which led to a lack of private market demand in Singapore, said Hyphens Pharma.

It is now working with a partner to sell the test kits overseas, although the S$300,000 provision was made for Q3 due to the products' short shelf life and non-saleability in Singapore.

Additional provisions may be required, depending on the group's ability to sell the test kits overseas and the eventual selling price.

Hyphens Pharma also recorded an allowance on its specialty pharma inventories in the Philippines due to poor demand during the extended Covid-19 lockdown period.

Gross profit decreased by 4.8 per cent to S$10.4 million for the quarter, while gross profit margin dipped to 32.9 per cent from 35.4 per cent a year ago with lower margins across all segments, especially the medical hypermart and digital segment.

Earnings per share stood at 0.28 Singapore cent, down from 0.6 cent in the year-ago period.

The improvement in revenue for the three months to September was led by higher sales in the proprietary brands segment, which grew by 22.9 per cent due to higher demand for dermatological products under the Ceradan brand and nutritional supplements under the Ocean Health brand.

No dividend was recommended for the quarter, the same as a year ago. The board said that on the grounds of prudence, it will review the dividend payout after the close of the financial year.

Hyphens Pharma's shares lost 6.6 per cent or 2.5 Singapore cents to trade at 35.5 cents as at 9.14am on Thursday.