MDS reports 58% decline in nine months net profit

February 12, 2021

Medical Disposables & Supplies Limited, for the nine months ended December 31, 2020 reported Revenue amounting $1.77 billion, an increase of 2%, relative to $1.73 billion booked the previous year. For the third quarter revenues totaled $626.08 million up 4% year over year (2019: $603.36 million). MDS noted, “The growth in sales was primarily driven by increases in the performance of the Pharmaceutical and Medical Divisions. Consumer goods felt the full impact of the COVID-19 pandemic with consumers opting for necessities such as healthcare related products rather than discretionary items.”

Cost of sales rose 1% to close the period at $1.333 billion relative to the $1.326 billion reported for the same period last year. This resulted in gross profit which increased 8% to a total of $432.54 million relative to the $398.89 million for the corresponding period in 2019. Gross profit for the third quarter amounted to $169.12 million, a 36% improvement compared to the $124.60 million reported in 2019.

Total operating cost closed the period at $363.78 million, up 15% (2019: $316.58 million). The Company stated, “This movement was due to increases in marketing and promotion expenses, which were required to support the expansion in business activities.” Of this, selling and promotional costs went up 22% to $159.65 million (2019: $131.04 million). In addition, administrative expenses increased by 14% to $181.88 million from $159.22 million documented in the same period last year. Notably, the company booked other operating income of $3.88 million for the period ended December 31, 2020 relative an income of $4.33 million of the same period in 2019. Depreciation for the nine months amounted to $21.25 million, 3% less than the $21.93 million reported in 2019.

As such, operating profit amounted to $68.76 million (2019: $82.31 million). For the quarter, operating profit closed at $39.94 million versus $18.33 million booked in the prior corresponding quarter.

The company’s finance cost was reported at $56.42 million compared a loss of $32.82 million in 2019. Loss on foreign exchange decreased by 88% to total $2.69 million (2019: $21.96 million). Furthermore, Gain on disposal of property, plant and equipment was $50,000 (2019: $1.15 million).

As a result, MDS reported profit before tax of $14.05 million, a 58% decrease relative to the $33.32 million in 2019. For the quarter, profit before tax closed at $27.16 million (2019: $6.95 million).

Consequently, net profit for the period amounted to $12.29 million relative to $29.17 million in 2019, a 58% decrease year over year, after a tax charge of $1.76 million (2019: $4.16 million). Net profit for the quarter amounted to $25.40 million (2019: $6.53 million).

Earnings per share for the period amounted $0.05 (2019: $0.11). EPS for the quarter amounted to $0.10 relative to $0.02 in 2019. The trailing twelve-month EPS amounted to $0.07. The number of shares used in the calculations is 263,157,895. MDS last traded on February 11, 2021 at $4.00 with a corresponding P/E ratio of 59.52 times.

MDS also noted, “The Company continues to be affected by the containment strategies imposed to combat the spread of COVID-19. However, we continue to realign our business strategies to focus on deeper market penetration, while capitalizing on a number of opportunities to provide medical responses with regards to the pandemic.”

Balance Sheet Highlights:

As at December 31, 2020, total assets amounted to $2.09 billion 25% more than $1.68 billion the year prior. This was primarily due to a 538% increase in ‘Cash and cash equivalent’ and a 45% increase in ‘Inventories’ which amounted to $79.54 million (2019: $12.46 million) and $923.89 million (2019: $638.90 million), respectively.

Shareholders’ Equity totalled $846.05 million (2019: $759.43 million) resulting in a book value per share of $3.21 (2019: $2.89).




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