Adcock Full-Year Earnings Fall as Weak Rand Raises Costs

Adcock Ingram Holdings Ltd. (AIP), the South African drugmaker subject to a $1.2 billion takeover bid from Chile’s CFR Pharmaceuticals SA, said full-year earnings per share are estimated to have fallen 17 percent to 18 percent as a weaker rand raised the cost of imports.

Sales for the 12 months through September probably rose 18 percent to 19 percent on 2012 to about 5.45 billion rand ($539 million), the company said in a statement today. Earnings before interest, taxes, depreciation and amortization gained 10 percent to 11 percent.

“2013 has been a particularly challenging year for the company,” Johannesburg-based Adcock said. “Trading margins came under pressure as a result of competitive market conditions and the impact of the weaker rand on active ingredient costs.”

Chile’s biggest drugmaker CFR has made a 12.6 billion rand ($1.2 billion) cash and shares offer to buy Adcock as it seeks to expand in other emerging markets. CFR said on Nov. 15 combining the companies would generate cost savings of at least $440 million, while Adcock would generate as much as 46 percent of combined sales. Shareholders will vote on the takeover proposal on Dec. 18.

Adcock shares declined 0.7 percent to 70 rand as of 11:58 a.m. in Johannesburg. The CFR proposal values Adcock at 73.51 rand to 77.02 rand per share, CFR said on Nov. 15.

The rand has weakened 16 percent against the dollar in 2013, making it the worst performer of 16 major currencies tracked by Bloomberg.

Adcock said it will report full-year results on Nov. 27.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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