AFT Pharmaceuticals - H125 profitability weighed down by one-offs

AFT Pharmaceuticals has released a trading update ahead of its H125 results, expecting to report a c NZ$2m operating loss for the period ending September 2024, driven by one-off factors affecting the top line, as well as increased investments in expanding its international footprint. While the domestic Australian and New Zealand (ANZ) market continued to perform well (double-digit growth), stocking rationalisation by certain international customers, a doctors strike in South Korea (a key market for Maxigesic IV, which drove 57% y-o-y revenue growth in Asia in FY24) and higher sales and marketing expenses weighed on margins. Management expects the sales momentum to pick up in H2, a traditionally stronger period for AFT, although previous FY25 guidance (operating profit of NZ$22–25m) is likely to be revised, reflecting the H1 results. We await the full results on 21 November, before updating our estimates.