Adcock’s shares declined 7.9 percent, the biggest drop since the company’s 2008 listing, to close at 58.20 rand, the lowest since March 23.
Net income for the six months through March dropped to 335.3 million rand ($40.3 million), from 353.4 million rand a year earlier, the Johannesburg-based company said in a statement today. Diluted earnings per share excluding one-time items declined 10 percent to 198.4 cents, missing the 266.5-cent average estimate of two analysts surveyed by Bloomberg.
“The earnings were weaker than estimates and pricing remains tough,” Ferdi Heyneke, a trader at Afrifocus Securities in Johannesburg, said by phone today.
Price reductions averaged 2 percent for the half-year, the company said in the statement. The gross margin narrowed to 46.7 percent from 49.2 percent and may only increase about 1 percent in the second half because of price deflation, Chief Executive Officer Jonathan Louw said in a telephone interview from Johannesburg today.
Costs related to upgrades pushed capital spending to 274 million rand, from 217 million rand a year earlier. That’s expected to climb to 406 million rand in fiscal 2012, before declining to 158.5 million rand next year, Louw said.
To contact the reporters on this story: Janice Kew in Johannesburg at firstname.lastname@example.org;
To contact the editor responsible for this story: Antony Sguazzin at email@example.com