SPIMACO ADDWAEIH records losses of SR171 mln during 2022‎

Saudi Company for Pharmaceutical Industries and Medical Supplies “SPIMACO ADDWAEIH” recorded losses, after zakat and tax, of 171 million riyals during the year 2022 AD, compared to a profit of 18 million riyals in the previous year. This came after the announcement today of the annual financial results ending in 31-12-2022.

The operational loss amounted to 126 million riyals during the year ending in 2022, compared to a profit of 56 million riyals in the previous year.

As for gross profit, it amounted to 566 million riyals in the current year, compared to 621 million riyals in the previous year, a decline of 9%.

The loss per share in the current year amounted to 1.38 riyals, compared to a profit of 0.22 riyals in the previous year.

The consolidated net loss amounted to SAR 171.2 million in the fiscal year 2022 compared to a net profit of SAR 18.1 million in the fiscal year 2021, mainly due to the following:

Revenues: Decreased by 2.3% or SAR 33.4 million to SAR 1,426.3 million, on the back of weakness in pharmaceutical diluents revenues, which was partially offset by strong growth in service revenues.

Revenue from pharmaceutical sales recorded a decrease of 4.4% year-on-year to reach SAR 1,275.5 million affected by re-pricing of some products by the Food and Drug Authority, inappropriate changes in the sales mix, in addition to a decrease in sales of one of the licensed products, which was It has a general negative impact on total sales. The company was able to partially offset this by increasing sales volume by 22% year-on-year to 94 million packages, from 77 million packages last year.

Gross profit: Decreased by SAR 54.3 million (-8.8%) to SAR 566.3 million in FY2022 mainly due to inappropriate changes in sales mix, price revisions from SFDA, and lower sales A licensed product along with continued inflationary pressures on cost. As a result, the gross profit margin for the fiscal year 2022 reached 39.7%, compared to 42.5% for the previous year.

Selling, general, and administrative expenses: increased by 15.9%, equivalent to 87.3 million Saudi riyals, to 638.1 million Saudi riyals, compared to 550.8 million Saudi riyals in the fiscal year 2021. This increase came as a result of reviewing the salary scale, which witnessed an adjustment in salaries in line with With labor market standards, in addition to the effect of disbursing benefits to employees whose services have been terminated, and the increase in sales, promotion and training expenses, in line with the business restructuring process that began in 2022.

Research and development expenses: increased by 46.4%, equivalent to 13.5 million Saudi riyals, to 42.6 million Saudi riyals, due to the increase in salaries and benefits due to the restructuring of the management team of the Science Department and the suspension of the capitalization of some employee salaries related to research and development projects in accordance with the standard International Accounting 38, in addition to writing off some capitalized research and development costs. Research and development expenses for fiscal year 2022 were 3.0% of revenue compared to 2.0% last year.

Depreciation and amortization expenses: increased to 90.2 million Saudi riyals, compared to 88.1 million Saudi riyals in the previous year.

Operational loss: It amounted to 126.1 million riyals, compared to profits of 55.5 million riyals recorded in the previous year. This is due to the decrease in total profit and the increase in selling and marketing expenses, general and administrative expenses and pharmaceutical research expenses in line with the implementation of the company’s transformation plan. ,

Net financing cost: increased by 9.5% to SAR 43.2 million. This increase came despite recording a decrease of 16.8% in total debt, to reach 1,056.8 million Saudi riyals, which was offset by an increase in interest rates during the year.

Zakat and income expenses: increased by 12.6 million Saudi riyals to 25.0 million Saudi riyals, and returned to normal levels compared to a low base in 2021 as a result of excess savings in provisions in 2020.

The company said that some comparative items for revenues and expenses have been reclassified to conform to the current period presentation.

Additional Information:

In 2022, Spimaco Pharmaceutical completed a series of improvements to its capabilities and operations in order to restructure the main business in the company, which included the following:

Upgrading the R&D department to accelerate the diversification of the company’s portfolio geared towards high-value sectors, including specialty and high-molecular drugs.

Streamlining operations, improving internal coordination, and restructuring commercial teams

Starting the implementation of the “Synergy Program”, which includes introducing a new organizational structure and reviewing incentive plans to be in line with the rates applied in the pharmaceutical industry in order to attract and retain the necessary competencies.