Aspen 6M - Debt Coming Down

On Thursday evening Aspen announced their six month figures. The numbers were largely in line with what they had earlier announced to the market in their trading statement.

The main thing that market participants were looking at was the overall debt levels, which have come down. They still have to reduce debt further though. The market seems to be happy with the results, as Aspen was mostly flat on a day when the overall market was down.



So far the debt restructuring strategy is working. They need to be at 3.5x Net Debt/EBITDA at the end of June, and their current rate is 3.3x. So they are ahead of where they need to be, but only just. The last thing current investors want is for Aspen to be forced to do a rights issue, increasing equity to reduce debt levels. That was the fear last year when the stock dropped to around R65.

Stephen Saad was asked about the impact of Covid-19 on their business. He said it is very difficult to forecast what the impact will be. He did say that they have seen people delaying elective surgery, which means a lower demand for their drugs. The good thing about elective surgery is that at a later point, people will still have the operations. In this case, it is a delayed demand. So when things go back to normal, Aspen should see a big spike in demand.

The results presentation was on Friday morning in Cape Town. Thanks to the 'inter webs', I watched the results at the office while eating breakfast. In general you always feel better about being a shareholder of Aspen after hearing Saad talk about the numbers, and the future plans for the company. Overall, the company is in the middle of their restructuring, and until they get their debt levels lower the stock will be a volatile holding.