Duopharma 1Q profit slides on forex loss due to stronger US dollar

KUALA LUMPUR (May 18): Duopharma Biotech Bhd’s net profit slipped 6.25% to RM13.56 million for the first quarter ended March 31, 2020 (1QFY20), from RM14.47 million for the corresponding quarter last year, no thanks to a stronger US dollar against the ringgit.

This was despite revenue growing 5.54% to RM158.71 million, from RM150.39 million, mainly due to higher demand from the private health sector, its stock exchange filing today showed.
The pharmaceutical company noted that the strengthening of the US dollar had resulted in unrealised foreign exchange (forex) losses on the company’s borrowings in US dollars.

Duopharma reported an unrealised forex loss of RM4.49 million for 1QFY20. In contrast, it recorded an unrealised foreign exchange (forex) gain of RM1.51 million for the year before.

On prospects, the group said it remains cautiously optimistic about its performance for the financial year ending Dec 31, 2020 (FY20), although it expects the year to be a more challenging one.

“The recent Budget 2020 saw an increase of 6.6% in allocation for the healthcare sector to RM30.6 billion, the highest ever allocation in Malaysian history,” said the group's managing director (MD) Leonard Ariff Abdul Shatar.

"Additional allocations have also been made to the Ministry of Health (MoH) as a part of its national Covid-19 countermeasures, which further fuel an optimistic outlook since approximately 50% of our sales are to the public sector,” he added.

Leonard also shared that the group had been informed that contract periods for the supply of pharmaceutical and/or non-pharmaceutical products to hospitals, clinics and others under the Malaysian government had been extended for twenty-five months, commencing on Dec 1, 2019, until Dec 31, 2021.

Additionally, the contract period of the off-take agreement for the supply of human insulin formulations has been extended for one year, commencing on Dec 2, 2019, until Dec 1, 2020, said Leonard.

“These extensions augur well for the group as they stabilise a significant portion of the group’s revenue for the said period. What’s more, it enables the group to mobilise our resources to intensify our foray into specialty products as one of our strategies moving forward to create a pool of niche products” he added.

Duopharma shares closed four sen or 2.38% higher at RM1.72 today, giving it a market capitalisation of RM1.18 billion. Over the past year, the counter has risen 26.5% from RM1.36.

The stock, which sank to as low as RM1.16 on March 16 this year — two days before the start of the nationwide movement control order (MCO) — has climbed 48.28% since.