Medical Disposables Limited (MDS) has restructured its consumer division, the only one which showed marked growth during the June quarter when other business lines were affected by COVID conditions.
The company announced this week ended that it no longer carries the consumer portion of the GlaxoSmithKline (GSK) portfolio as at September 1, 2020.
MDS further advised that it still retains the vaccine and pharmaceutical portfolios.
Three years ago in March 2017, MDS signed an agreement to co-distribute Panadol and other GlaxoSmithKline (GSK) consumer goods along with local medical products distributor Cari-Med.
MDS simultaneously started a consumer goods division, adding to pharmaceutical and medical sundries business lines.
This came out of the GSK with which MDS also gained consumer segments to MDS with products including Panadol, Andrews Salts, Aquafresh toothpaste, Sensodyne toothpaste, and Voltaren gel.
Medical Disposables was founded by the Boothe family in 1998 and went public in 2013. For the year ended March 2020, the company had sales of JM$2.5 billion, compared to JM$ 2.2 billion in the fiscal year ended March 2019. However, this year profit slid from JM$112.76 million in 2019 to JM$34.56 million.
Under conditions caused by the COVID-19 virus, for the first quarter ended June 30, MDS generated sales revenue of JM$510.08 million, an 8.6 per cent reduction compared to the corresponding period in the previous year.
Managing director Kurt Boothe said the decline in sales is a direct result of the economic downturn brought about by the COVID-19 pandemic and the measures implemented to curtail its spread.
With the pharmacy network and patients overstocking multiple months’ supply on prescription items due to uncertain drug availability, the quarter reflected minimal sales activity due to market oversupply, he outlined.
Boothe said hospital activity was also minimal due to social distancing, quarantine preparations, restriction of population movement, resulting in the postponement of elective surgeries and prioritising critical cases.
Doctors’ office closures and reduction in operating hours also reduced patient load, all of which resulted in sales reductions of nine per cent and 22 per cent in the Pharmaceutical and Medical Divisions respectively.
Year over year saw a decrease of 8.5 per cent or JM$47.15 million in sales of medical supplies.
Going against the trend, the consumer division saw growth in sales of JM$9.5 million or 18 per cent when compared to the corresponding period in the previous year.
Booth states that this was reflective of the expanded product lines and the restructuring of the division.
Gross profit of JM$112.8 million decreased by 20 per cent or JM$28.3 million over the previous year as a result of the reduction in sales of pharmaceutical and medical disposable products. Gross profit percentage for the period fell to 22.1 per cent compared to 25.3 per cent in 2019.
Total operational expenses increased by $12.32 million from $102.64 million in 2019 to $114.96 million in 2020, representing an increase of 12.0 per cent.
Management outlined that the movement was due to the costs associated with boosting the sales effort, particularly in the Consumer Division. Operational expenses accounted for 22.5 per cent of sales revenue for the current period, up from 18.4 per cent of sales revenue for corresponding period in the previous year.
Total non-operational expenses decreased significantly from $15.9M in 2019 to $4.95M in 2020 or 75.4 per cent due mainly to gains on foreign exchange.
Given the fall off in sales revenue, MDS suffered a loss before taxation of $7.07 million, a decrease of $23 million over the previous year.
Meanwhile, total assets grew by JM$230.7 million or 13.95 per cent from JM$1.65 billion to JM$1.88 billion, due to increases in Inventories and Property, Plant and Equipment.
Total Liabilities increased by JM$179 million or 20.4 per cent from JM$878.1 million to $1,057.2 million over the prior year.
This was due to an increase in short-term borrowings and bank overdraft used to facilitate growth and business expansion, management said.
Shareholders’ equity increased by $51.6 million or 6.7 per cent from $775.1 million to $826.7 million.
Boothe said that despite the significant impact on the business brought about by the containment strategies imposed to combat the spread of COVID-19, “we continue to realign our business strategies to focus on deeper market penetration and strengthening relationships with our customers, shareholders and the MDS family.”