This article first appeared in The Edge Financial Daily on November 21, 2019

KUALA LUMPUR: Pharmaniaga Bhd has reported a 97% drop in its third quarter (3Q) net profit to RM481,000 from RM15.05 million a year earlier as operating expenses rose.

In a statement to Bursa Malaysia yesterday, Pharmaniaga said revenue, however, rose 22% to RM716.85 million for the quarter ended Sept 30, 2019 from RM587.66 million a year ago, due to stronger demand from the concession and non-concession businesses.

“However, as a result of higher operating expenditure due to non-recurring expenses, the group recorded a profit before tax of RM4 million, a decrease of 77.9% from the same quarter last year,” it said.

For the cumulative nine-month period, the group said its net profit declined to RM29.38 million, from RM38.03 million a year earlier. Revenue was, however, higher at RM2.1 billion versus RM1.79 billion previously.

Looking ahead, Pharmaniaga said the group foresees further impact on its earnings in the fourth quarter due to higher amortisation of the Pharmacy Hospital Information System.

“Nevertheless, the group remains optimistic about long-term prospects, particularly given the extension by the health ministry for Pharmaniaga’s services for the provision of medicines and medical supplies to the ministry’s facilities from Dec 1, 2019 to Dec 31, 2021. In addition, the group will also continue to provide logistics and distribution services to the ministry for a period of five years ending Dec 31, 2024.

“Given its proven track record and performance, the group is well-equipped to continue providing quality products and services. In the interim, Pharmaniaga remains focused on strengthening its capabilities and operational efficiencies to meet the healthcare needs of both domestic and overseas markets,” it added.