Aspen flags interim earnings slide but sticks to growth outlook

Aspen Pharmacare expects a double-digit drop in interim earnings, with once-off restructuring costs of about R700 million weighing on results.

The group, however, reiterates its guidance for a stronger second half and double-digit growth in underlying earnings for the full year.

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In a trading statement released late on Wednesday, Aspen Pharmacare Holdings said normalised headline earnings per share (Nheps) for the six months to end-December 2025 are expected to decline by between 19% and 24% to between 550.4 cents and 586.6 cents, compared with 724.2 cents a year earlier.

Aspen’s share price traded more than 5% firmer around 12pm on Thursday, changing hands at R114.79.

Headline earnings per share (Heps) are forecast to fall by 33% to 38% to a range of 400.1 cents to 432.4 cents, while basic earnings per share (EPS) are expected to drop by 36% to 41% to between 317.2 cents and 344.1 cents.

Aspen said the weaker interim performance reflects a combination of once-off restructuring costs related to its sterile FDF manufacturing facilities in South Africa and France, as well as a high comparative base in the prior period.

The first half of the 2025 financial year benefited from a now-cancelled mRNA manufacturing contract, which boosted earnings at the time.

Normalised group Ebitda for the six months to December 2025 is expected to be between 11% and 16% lower than the R5.8 billion reported in the prior corresponding period. Aspen said this outcome is in line with guidance previously provided to the market, given the absence of the mRNA contribution in the current period.

Despite the weaker interim numbers, the group said its outlook for the full year to end-June 2026 is unchanged.

Performance update

The group’s Commercial Pharmaceuticals division, its largest business segment, delivered revenue growth of 4% in the first half and double-digit growth in normalised Ebitda on a constant-currency basis.

Aspen said this was underpinned by organic growth across injectables, over-the-counter products, and prescription medicines, with strong demand for Mounjaro in South Africa and an improved contribution from its restructured China business.

In October last year, Aspen reached an agreement with Eli Lilly to distribute and promote the weight-loss drug Mounjaro in South Africa and parts of sub-Saharan Africa.

(The drug was first launched locally by Aspen in December 2024 for the treatment of Type 2 diabetes under that arrangement.)

Manufacturing returned a positive Ebitda in the interim period, helped by the receipt of €25 million (approximately R473 million) from the settlement of the mRNA contract dispute.

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Aspen also saw stronger cash generation, with free cash flows excluding dividends expected to exceed R1.7 billion for the half-year.

Lower capital expenditure, improved working-capital efficiency and favourable exchange rates reduced net debt to R28.6 billion at December 2025, from R31.2 billion in June.

Guidance intact

Aspen continues to expect double-digit growth in normalised Heps for the year, measured in constant exchange rates, supported by improved performance in the second half as operational improvements in manufacturing begin to take effect.

The group is expected to publish its interim results on 3 March 2026.

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