KUALA LUMPUR: Slow demand for Covid-19 vaccine following the country's move to endemic phase has dragged down Pharmaniaga Bhd's earnings for its financial year ended December 31, 2022 (FY22) subsequently pushing the company to a PN17 category.
The pharmaceutical company posted a net loss of RM607.32 million in FY22 compared to a net profit of RM172.15 million in FY21.
Pharmaniaga's revenue dropped 27.1 per cent to RM3.51 billion versus RM4.82 billion in FY21 due to lower demand from the government for the purchase of Covid-19 vaccines.
"The manufacturing division recorded a loss before tax of RM549.0 million for the financial year under review as a result of the provision for slow-moving inventories on Covid-19 vaccines in adherence to the requirement of Malaysia Financial Reporting Standards (MFRS)102 Inventories," said the company in its Bursa filing.
Its logistics and distribution division recorded a lower pre-tax profit of RM24.4 million for FY22 compared to RM72.8 million in FY21 due to lower distribution income on Covid-19 vaccines coupled with higher operating costs as a result of opening three new warehouses in light of the volume increase.
For the fourth quarter (Q4), the company posted a net loss of RM644.39 million compared to a net profit of RM85.48 million in Q4 2021.
Revenue, however, rose to RM862.72 million versus RM711.72 million in the same period the previous year.
On Monday, the board announced that the company had become an affected listed issuer under Practice Note 17 (PN17).
"The company has triggered the prescribed criteria pursuant to Paragraph 8.04 of the Main Market Listing Requirements and Paragraph 2.1(a) of Practice Note 17 of the Bursa Malaysia Securities Bhd whereby the company has become an affected listed issuer under PN17 on the basis that Paragraph 2.1(a) of the Practice Note 17 has been triggered in the company's unaudited consolidated financial statements for the period ended December 31, 2022 announced on February 27, 2023," it said.
The company noted it was taking necessary steps to address its PN17 status.
"The company is in the midst of formulating a plan to regularise its financial condition and the announcement on the same will be made in due course in accordance to the listing requirements," it said.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) trimmed Pharmaniaga's FY23 and FY24 earnings forecasts by 51 per cent as its raised its operating expense and finance cost assumption.
HLIB said in accordance to the requirement of MFRS102, Pharmaniaga had made a provision of RM552.3 million for its slow-moving Covid-19 vaccine stock, resulting in a negative shareholders' equity position of RM248.7 million and subsequently triggering the criteria for PN17.
"There could potentially be a reversal in the impairment provision should Pharmaniaga be able to sell more of its existing Covid-19 stockpile.
"Currently, the group is engaging with various parties including the Islamic Development Bank and Ministry of Health to sell its stockpile," it said.
HLIB Research downgraded the stock to 'Sell' with a target price of 31 sen.
The company's share price plunged to 22 sen at the opening bell on Tuesday from 44 sen on Monday's closing following the announcement.
Its share price closed 17 sen or 38.64 per cent lower today at 27 sen, pushing its market capitalisation to RM353.76 million.