JSE-listed Aspen Pharmacare Holdings has reported that the group delivered an encouraging performance for the first half of its current financial year, supported by the continued strong momentum in commercial pharmaceuticals and solid progress in the reshaping of its sterile finished dose form (FDF) manufacturing facilities in South Africa and France.

The company notes that one-off restructuring costs of about R700-million relating to these sterile FDF manufacturing facilities have been incurred in the first half of this year and have negatively impacted on earnings per share (EPS) and headline earnings per share (HEPS).

The company says the period should be viewed as transitional, with a stronger performance anticipated in the second half of the financial year, as the benefits of operational improvements and reshaping within manufacturing are progressively realised.

Aspen explains that the comparative performance for the period has been influenced by a high base in the prior year.

The company notes that its operating performance in the 2025 financial year was heavily weighted towards the first half, which included a contribution from the subsequently cancelled mRNA Manufacturing contract of about R1.5-billion, resulting in normalised group earnings before interest, taxes, depreciation and amortisation (Ebitda) of R5.8-billion in the first half of 2025.

The second half of financial year 2025 resulted in normalised group Ebitda of R3.8-billion, reflecting a reversal of a portion of this contribution, of about R500-million, following the emergence of a material contractual dispute in respect of the mRNA Manufacturing contract.

The dispute was settled in October 2025, with the counterparty paying Aspen €25-million, or about R500-million.

While the settlement proceeds were received during the first half of this year and manufacturing Ebitda for the period benefited from this receipt, Aspen says the absence of the prior-period mRNA contributions has resulted in normalised Ebitda for the first half of the 2026 financial year being lower than that of the first half of the prior financial year.

The company says this outcome is consistent with previous guidance to the market.

The company notes that performance highlights for the period include Commercial Pharmaceuticals, Aspen’s most material business segment, having delivered revenue growth of 4% and double-digit normalised Ebitda growth in constant exchange rates (CER) underpinned by organic revenue growth in all three segments – injectables, over-the-counter and prescription.

Performance was supported by strong demand for Mounjaro in South Africa and an improved profit contribution from the reshaped business in China.

The company says reported performance was diluted by the strength of the rand against most of Aspen’s major trading currencies during the period.

Manufacturing achieved a positive Ebitda in the first half of this year, aided by the receipt of the dispute settlement proceeds.

Aspen says the reshaping of the loss-making sterile FDF Manufacturing facilities in South Africa and France is well progressed with the expected benefit of the cost reductions to positively impact from the second half of this year onwards and planned to be fully realised in the 2027 financial year.

The company notes that commercial production of insulin in its South African sterile facility is well advanced, with final regulatory approval expected in the first quarter of the current calendar year.

Free cash flows (excluding dividends paid) are expected to exceed R1.7-billion, supported by an operating cash conversion rate well ahead of the group’s target of 100%, a working capital to revenue ratio of less than 46% and lower investment in capital expenditure (capex).

The company explains that these stronger free cash flows, together with favourable rand closing rates, led to lower net debt of R28.6-billion – compared to June 2025 at R31.2-billion – and a leverage ratio – net debt-to-Ebitda – of below 3.5 times.

Additionally, the company points out the divestment of Aspen APAC for a gross consideration of A$2.37-billion which was announced on December 29.

Aspen explains that the APAC divestment is subject to certain conditions precedent, including the requirement of general shareholder approval. The expected completion date is the end of May.

The group’s previously communicated guidance for the full 2026 financial year remains unchanged.

This guidance relates to total operations, namely continuing and discontinued operations, and accordingly includes the APAC business for the full financial year.

As such, the company says the guidance excludes the impact of the APAC divestment.

The group’s outlook for the current financial year comprises double-digit growth in normalised HEPS in CER; Commercial Pharmaceuticals to deliver mid-single-digit revenue growth and stronger normalised Ebitda growth in CER; manufacturing normalised Ebitda for financial year 2026 to be in line with financial year 2025 in CER; sterile FDF Manufacturing in South Africa and France to shift to positive normalised Ebitda and cash flow by financial year 2027; and stronger free cash flow underpinned by an operating cash conversion ratio of greater than 100%, reduced capex and lower working capital.

Normalised Ebitda for the six months ended December 31, 2025, is expected to be 11% to 16% lower year-on-year.

Normalised HEPS, HEPS and EPS for the six months ended December 31, 2025 are expected to be between 19% and 24%, between 33% and 38% and between 36% and 41% lower year-on-year, respectively.

Aspen intends to release its results for the six months ended December 31, 2025, on March 3.