ALLEGAN — Perrigo Co. plc’s CEO says business has rebounded well after taking a hit in the early months of the COVID-19 pandemic, although a “historically weak cough/cold season” dampened quarterly sales growth.
Sales for Perrigo’s second quarter grew 3.4 percent over a year earlier to $981.1 million. The three-month period that ended July 3 included year-over-year reductions in customer product inventories of over-the-counter cough, cold and other medications.
Sales for the Consumer Self-Care Americas division, Perrigo’s largest group, dipped 0.9 percent in the second quarter from a year earlier to $622.3 million, although “the quarter got stronger and stronger as it progressed,” Chairman and CEO Murray Kessler said.
“The good news is that the business and markets we’re in are normalizing with sharp rebounds and consumer takeaway as the world is slowly and steadily reopening,” Kessler said today during a conference call to discuss quarterly results. “Barring a broad scale step backward due to new COVID-19 restrictions, I believe Perrigo’s broad diversity of product lines and geographies has helped the company weather this unprecedented storm.”
Perrigo reported a $57.7 million net loss for the second quarter, or 43 per diluted share. That compares to $60.6 million in net income, or 44 cents per diluted share, in the second quarter of 2020.
The company, which is domiciled in Dublin, Ireland but run from Allegan, saw its shares trade more than 10 percent lower than today’s opening price of $43.82 per share with about an hour to go before the stock market closed.
The quarterly net loss primarily resulted from $1.17 per diluted share in impairment charges related to the planned sale of the Latin American OTC business, the company said.
As well, in the second quarter Perrigo returned advertising and promotion spending to pre-COVID levels and had higher research and development spending. Those two items affected earnings by $14 million, Kessler said.
The company expects the cough and cold season to “normalize” for this coming winter, he said.
“Retailers had excess inventories of cough/cold products due to the low demand this season, and they appear to be a bit more conservative buying in at normal levels going into the next cough/cold season,” Kessler said. “Our shipments were outpacing consumer takeaway for the better part of last year. The good news is that this trend reversed itself in the second quarter. And since April 2021, Perrigo consumer takeaway is now cumulatively outpacing Perrigo factory shipment. So shipment should begin to realign with consumer takeaway.”
As well, the company had “unfavorable” overhead costs at production plants from the weak cold and cough season, plus higher costs for freight, distribution and commodities that “rose quickly during the quarter,” Kessler said.
Midway through 2021, Perrigo reported $1.99 billion in net sales, down slightly from the $2.03 billion in the first half of 2020, with a net loss of $19.6 million, or 15 cents per diluted share.