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HARD TIMES! Cipla Quality Chemical Industries Warns Shareholders To Expect Losses

Cipla Quality Chemical Industries Limited (CiplaQCIL), a pharmaceutical manufacturing company in Uganda has issued a profit warning informing shareholders that the company is likely to record losses this year.

A profit warning is a warning declaration issued by a listed company to investors through a stock exchange. It warns investors that the profit of the company in the coming quarter will significantly decline when compared with that of the same quarter of previous year, or the company may even make a loss.

In a cautionary statement issued today, CiplaQCIL says: “The Board of Directors wishes to inform shareholders of the Company and potential investors that based on preliminary review of the Company’s unaudited interim financial statements for the six month period 1st April 2019-30th September 2019, it is expected that the Company will record a loss as compared to a profit for the same period in 2018.”

The Company attributes the dip in performance to the “impact of lower sales revenue, change in product mix and increased pressure on margins due to competitive conditions” and “challenges regarding the collection of certain key overdue receivables, resulting in an increase in expected credit loss and increase in associated interest costs.”

“The Company is in the process of addressing these issues before the end of the current financial year and anticipates a significant recovery in sales and a return to profitability in the 2nd half of the financial year,” the Company Secretary says in a statement, adding: “The actual financial results of the Company for the year ended 31st March 2020 may differ from the information contained in this announcement.”

It should be noted that CiplaQCIL announced its Initial Public Offer (IPO) by floating a total of 657,179,319 shares on to the Uganda Securities Exchange (USE) in August 2018.

 The total shares floated represented 18% of all the shares owned by the company. Cipla Ltd, the Indian pharmaceutical giant manufacturers remained as the majority shareholders with 51%, having floated 11% of its shares it holds in CiplaQuality Chemicals Industries.

 Initially, it owned 62% of the company while Quality Chemicals, who remained with 31% shares, was owning 38% shares.

The Initial Public Offer (IPO) kicked off with a market stimulating fee of Ush256.5 per offer share. The minimum shares to be sold to each individual were 1000 shares.

This meant that one needed to pay at least Shs256,500 to become a shareholder in CiplaQuality Chemicals Industries Ltd.

 However, CiplaQCIL’s share price on the bourse has since fallen to Shs128 per share as of today.

During the official listing event in 2018, Nevin Bradford, the CiplaQuality Chemical Industries Ltd Chief Executive Officer, said they intended to become a centre of excellence in the manufacturing of quality, affordable and newer medicines that improve the quantity and quality of life.

“Our World Health Organization (WHO) prequalified products are approved by regulatory authorities in 19 countries including Uganda, Kenya, Rwanda, Tanzania, Namibia, Ivory Coast, Zambia, Zimbabwe, Malawi, Namibia, Mozambique, Ghana, Ethiopia, Angola, South Sudan, Cameroon and Ivory Coast among others,” said Bradford.

He added the CiplaQCIL is the only pharmaceutical manufacturer in Sub Saharan Africa supplying malaria medicines to the Global Fund.

CiplaQuality Chemical Industries Ltd, that is believed to have  a total turnover of $60 million, is the only company in Africa that manufactured triple-combination antiretroviral (ARV) drugs, anti-malarial drug Lumartem, containing artemisinin and lumefantrine and the Hepatitis B generic medicines Texavir and Zentair.

Taddewo William Senyonyi
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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