Full-year results at US-based pharmaceutical and nutritional product manufacturer Perrigo were helped by the addition of a number of exceptional items, but also showed solid growth before exceptionals.
The company said that its sales for the year to 29 June 2002 were up 10 per cent to $826.3 million from $753.5 million in the previous year. Net profit was $50.2 million compared with $27.7 million in 2001, and reached $48.9 million before the exceptional items compared with $40.5 million.
The exceptional items for 2002 were after-tax income of $17.9 million from vitamin litigation settlements and an after-tax charge of $16.6 million related to the restructuring of some of the company's Mexican pharmaceutical operations. Net profits in 2001 included a charge of $12.8 million after-tax reflecting the discontinuation of a product line and a vitamin litigation settlement.
David T. Gibbons, president and chief executive officer of Perrigo, said that the Mexican unit, Quimica y Farmacia, which Perrigo bought in 1997, was attractive because of its pharmaceutical manufacturing and packaging capabilities. "This business participates in some non-core markets, which are marginally profitable. We will exit the non-core areas and focus our efforts and resources on our core store brand over-the-counter (OTC) pharmaceutical and nutritional business."
He continued: "Fiscal 2002 sales growth was spurred by the addition of Wrafton Laboratories, new products and generally strong demand for Perrigo's store brand OTC pharmaceutical and nutritional products. We also recorded margin expansion through operational efficiency initiatives, tight operating expense control and our ability to manage pricing to offset the impact of higher quality costs.
"We exit fiscal 2002 with a very strong balance sheet. Cash and equivalents increased nearly sevenfold to end fiscal 2002 at $76.8 million. Throughout the year, we tightly controlled inventories, receivables and costs, while investing in quality and service initiatives and research and development."
He added that 2003 was likely to see the company further improve its margins, although this would not be easy in a highly competitive marketplace. Added costs relating to an ongoing quality improvement programme and liability insurance would also impact results, he said, with profit growth likely to be flat at best.
Perrigo is the largest US manufacturer of over-the-counter (non-prescription) pharmaceutical and nutritional products sold by supermarket, drug, and mass merchandise chains under their own labels. The company's products include over-the-counter pharmaceuticals and nutritional products such as vitamins, supplements and drinks.