R1 billion loss for one of South Africa’s biggest companies
Aspen Pharmacare, a South African-based pharmaceutical giant, has posted a loss of R1 billion amid contract issues and billions in impairments.
Founded in 1997, Aspen is one of largest manufacturers of generic medicines in the southern hemisphere, and supplies generic medicines to over 150 countries.
The company is one of the largest in South Africa and has a market cap of R45 billion. However, the latest financial year has been a struggle, with its share price dropping by 50%
In its financial results for the year ended 30 June 2025, Aspen said that its manufacturing performance and intangible assets impairments have been impacted by a material contractual dispute.
The dispute is for a confidential contract related to the group’s manufacturing and technology agreement with a customer of mRNA products.
mRNA technology is increasingly used in vaccine technology, and was utilised in the Pfizer and Moderna COVID-19 vaccines.
Due to the consequences of the dispute and related risks, normalised EBITDA from FY 2025 of R0.7 billion in constant exchange rates was 38% of that reported in FY 2024.
The dispute is now the subject of a contractually prescribed adjudication process.
Moreover, the group was impacted by the retrospective implementation of global minimum tax legislation in South Africa.
It was further impacted by an announcement by the Mauritian government of a Qualified Domestic Minimum Top Up Tax (QDMTT) of 15%, effective from FY 2025, effective from FY 2025.
The move has impacted Commercial Pharmaceuticals’ intangible asset valuations and the group’s effective tax rates.
Higher group effective tax rates are expected to be sustained.
The QDMTT has materially increased the tax rate used for Commercial Pharmaceuticals brand-related intangible asset valuations.
Financials
The group said that the intangible asset impairments totalled R4.1 billion, and compromised the:
- DMTT related impact of R1.7 billion,
- The mRNA asset impairment of R0.8 billion
- Regional performance-related impairments of R1.6 billion
These impairments led to the group incurring a loss for the year of R1 billion.
The impairments and the increased restructuring costs have adversely impacted Aspen’s earnings per share and headline earnings per share.
Earnings per share declined from a positive 991 cents per share a year before to a loss of 244 cents a year later.
The drop in headline earnings was not as severe, but it still fell from 1,357 to 792 cents per share.
The group’s revenue, operating profit, gross profit, and normalised profit declined over the year.
In a somewhat positive development, the group said that Finance costs benefited from interest rate cuts across the group’s EUR, ZAR and AUD debt pools in the second half of the year.
Nevertheless, the group’s year-on-year finance costs have risen, driven by higher net debt levels and increased foreign exchange losses driven by US tariff-led global volatility in exchange rates.
The group’s dividend per share was also nearly halved from 359 cents per share.
| Key Performance Indicators (R’million unless stated) | Reported June 2025 | Reported June 2024 | Change in reported rates % | Change in CER % |
|---|---|---|---|---|
| Revenue | 43,363 | 44,706 | (3) | 1 |
| Gross profit | 19,129 | 19,454 | (2) | 4 |
| Operating profit | 1,437 | 6,998 | (79) | (77) |
| Normalised EBITDA(3) | 9,591 | 11,255 | (15) | (8) |
| (Loss)/profit for the year | (123) | 5 714 | >(100) | >(100) |
| Headline earnings per share (cents) | 792.1 | 1,356.6 | (42) | (35) |
| Normalised headline earnings per share (cents)(4) | 1,055.8 | 1,492.1 | (29) | (22) |
| (Loss)/earnings per share (cents) | (243.9) | 991.4 | >(100) | >(100) |
| Dividend per share (cents) | 211 | 359 | — | — |
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