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UPDATE 1-South African drug group Aspen aims to grow in U.S. market

Published 10/09/2015, 01:59 am
Updated 10/09/2015, 02:07 am
© Reuters.  UPDATE 1-South African drug group Aspen aims to grow in U.S. market
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(Adds CEO comment, detail)

By TJ Strydom

JOHANNESBURG, Sept 9 (Reuters) - South African drugmaker Aspen Pharmacare APNJ.J on Wednesday reported a slowdown in full-year profit growth to 13 percent as a result of currency volatility and said it aimed to expand its business in the United States.

Aspen supplies drugs to Europe, Australia and most of Latin America, making about 150 countries in total. It has grown rapidly after expanding outside its highly-regulated home market, increasing profits by more than 25 percent annually since 2012 but has so far has not been able to increase sales the U.S. market.

Chief Executive Stephen Saad told Reuters the company now wants more revenue from the United States and to turn Aspen into a "decent player" in the world's largest pharmaceutical market via organic sales growth or by buying businesses.

Aspen has grown sales by 45 percent on the previous year in Europe, Russia and some of its smaller neighbouring states, which together account for nearly a third of its total revenue of 36.1 billion rand for the full-year. Its South African business had sales of 8.6 billion rand in the year.

The company, which has factories in 10 countries, imports many of its drug-making ingredients and pays for them in euros, South Africa's rand and the Australian dollar, meaning that a stronger U.S. dollar erodes its earnings.

"This was the worst possible mix of currencies for us," Saad said.

The rand and the Australian dollar have both lost more than 13 percent against the U.S. dollar so far this year.

"The group remains exposed to the strength of the U.S. dollar against its primary trading currencies," Aspen said in a statement.

Earnings in euros usually offset weaker results in emerging markets, but this year the euro also lost ground against the dollar, weakening by about 8 percent since January.

Aspen's diluted headline earnings per share were 1,149.7 cents in the year to end-June from 1,016.1 cents the year earlier.

Headline EPS is the most widely watched profit measure in South Africa.

Aspen's shares were up 2.93 percent by 1155 GMT, but closed 0.32 percent weaker on 324.91 rand, against a 0.32 percent gain by the JSE's benchmark Top-40 index .JTOPI . (Editing by James Macharia and Jane Merriman)

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