AFT Pharmaceuticals’ revenue up by 20 per cent but net profit down to $10.7 million

AFT Pharmaceuticals’ operating revenue is up by 20 per cent to $156.6 million, but net profit after tax has fallen to $10.7 million in the year to 31 March, compared to $19.8 million last year. The company is also paying out its first dividend.

Strong product sales growth in all regions and markets has pushed AFT’s operating revenue up. However, operating profit was $19.7 million, down from $20.4 million last year, due to delays in obtaining US regulatory approval for Maxigesic IV, the intravenous form of the pain relief medicine.

Earnings Before Interest, Taxes, Depreciation and Amortisation was $21.4 million – the same as last year - but net profit was down due to a return to paying taxes, lower operating earnings, and higher finance costs.

The company is delighted with the progress it has made over the last year, AFT Pharmaceuticals chair David Flacks says in a media release. The second half of the year was better, with product launches and strong demand for AFT’s medicines in Australasia and other markets around the world.

Operating profit from product sales and royalties has grown strongly, despite significant sales investment in Australia, new investments in international markets, and an extended product development pipeline, adds Mr Flacks.

AFT started a new Australian sales team directed at GPs. Marketing expenses went up because of new products and the company launched products into China via e-commerce platform Tmall Global. AFT also expanded its international business, including the creation of a majority owned subsidiary, AFT Pharmaceuticals UK.

“This investment in distribution and product promotion, alongside our investment in research and development has diluted our earnings for the 2023 financial year,” says managing director Hartley Atkinson in a media release. However, he’s confident the investment will be a key driver of growth and shareholder value.

In good news for shareholders, Mr Flacks says the company directors elected to declare a maiden dividend of 1.1 cents per share. This reflects AFT’s confidence in the future and the growth prospects of the business, he says.

The dividend is 11 per cent of net profit after tax, lower than the policy to pay 20 to 30 per cent.

AFT’s directors decided a smaller pay out was appropriate given the company’s growth opportunities, the capital required to fund them, and the desire to reduce debt to target levels. Dividends were due to be paid on 4 July.

AFT has launched 22 new products this year in Australasia, meaning it now has 150 medicines in that market, including for pain management, eyecare, dermatology and gastrointestinal problems. The company plans to launch another 68 products by the end of the 2026 financial year.

It’s also expanding the medicines it sells overseas. Maxigesic is now sold in 61 countries. This year AFT registered a prescription fast-release tablet version with the US Food and Drug Administration, a first for a New Zealand company.

AFT is developing 21 products, which provides some protection, says Dr Atkinson, as development paths are never smooth and are often unpredictable. They include a topical treatment for strawberry birthmarks and an eye drop for drug resistant superbugs, which could both have significant global sales potential, he says.

AFT expects the momentum of the 2023 financial year to continue in the new financial year, with the launch of new products, growth of existing products and investments in global distribution networks.

An operating profit of $22 million to $24 million is expected for the year to March 2024. However, it depends on launches in Australasian and international markets. The expected profit does not include $6 million of licensing income, which is expected in the first half of 2024 when Maxigesic IV launches in the US. Commercialisation plans for Maxigesic Rapid Tablets in that market could also influence results.

“AFT has entered the new financial year well-positioned to extend its record of growth,” says Dr Atkinson. The company’s rolling 12-month revenue target of $200 million is clearly in sight, he says, as the company builds its presence domestically and internationally. A further update will be provided at the annual shareholder’s meeting in August.