Abbott Laboratories suffered losses of approx. Rs58 crore in the 2nd quarter

Abbott Laboratories, a Pakistani pharmaceutical exporter, reported significant losses amounting to Rs579.85 million in the second quarter ending on June 30, 2023, in contrast to a profit of Rs338.2 million in the same period the previous year (SPLY).

The primary contributing factors to this loss encompass fluctuations in the exchange rate of the US dollar, economic instability, and the impact of inflation.

In its financial statements submitted to the Pakistan Stock Exchange (PSX) on Wednesday, the company attributed these losses to an increase in production costs, driven by the ongoing devaluation of the rupee and rising inflation.

The company recorded a loss per share of Rs5.93 in Q2 2023, compared to an earnings per share of Rs3.45 in SPLY.

Despite the challenges, sales for the quarter reached Rs13.44 billion, marking a 4% increase over the SPLY. Abbott noted that pharmaceutical sales grew by 12%, but nutrition sales decreased by 18%, primarily due to reduced demand caused by inflationary pressures.

However, despite higher sales, the pharmaceutical division’s gross profit margin declined from 34% during SPLY to 19% in 2QCY23. This decline was primarily attributed to increased product costs resulting from rupee devaluation and inflation, as the cost of sales rose to Rs10.84 billion from Rs8.53 billion in SPLY.

Operating expenses increased by 16% compared to the same period last year, mainly due to inflation. On the positive side, other charges decreased by 82% from the previous year due to the impact of exchange losses in 2QCY22.

Abbott’s tax charge for the quarter decreased by 44% to Rs971.72 million, compared to Rs1.729 billion in SPLY. The company explained that this reduction was in line with lower profitability and the impact of the previous year’s super tax levy in 2QCY22.

Abbott emphasized that it continues to grapple with challenges related to inflation and rupee devaluation. It urged the Drug Regulatory Authority of Pakistan to conduct necessary pricing reviews and adjustments.

Additionally, as a long-term measure, the company suggested that the Authority consider introducing an automatic mechanism and policy to counteract the effects of currency devaluation.

** Taking the lead from BR