KUALA LUMPUR: Duopharma Biotech Bhd, which closed its financial year ended Dec 31, 2019 on a stronger footing despite a weaker fourth quarter (4QFY19), revealed that it has obtained a 25-month extension of a government contract.

Group managing director Leonard Ariff Abdul Shatar said the group has been “recently informed that contract periods for the supply of pharmaceutical and/or non-pharmaceutical products to hospitals, clinics and others under the government have been extended for 25 months, from Dec 1 last year till Dec 31, 2021”.

The extension augurs well for the group, said Leonard Ariff in a statement yesterday, as it stabilises a significant portion of the group’s revenue for the period.

“What’s more, it enables the group to mobilise our resources to intensify our foray into specialty products as one of our strategies moving forward to create a pool of niche products,” he said, without revealing details.

The announcement came with the group’s release of its financial results for 4QFY19, which saw its net profit falling 16% year-on-year (y-o-y) to RM12.03 million from RM14.37 million, despite higher revenue, due to higher costs.

Quarterly revenue grew 19% y-o-y to RM137.76 million from RM115.63 million. But this was offset by the company’s cost of sales increase — up 30% y-o-y to RM85.56 million — while distribution costs rose 19% y-o-y to RM24.32 million, and administration expenses grew 36% y-o-y to RM15.13 million, its stock exchange filing showed.

Notwithstanding the weaker 4QFY19, the group closed FY19 with net profit rising 16% y-o-y to RM55.27 million from RM47.64 million, as revenue climbed to RM576.46 million from RM498.72 million.

The improved performance was attributed to higher sales due to stronger demand from the private and public health sectors, as well as a lower provision of inventories.

The pharmaceutical group proposed a higher final dividend of five sen per share versus four sen a year ago — bringing its full FY19 payout to six sen, versus 5.5 sen for FY18. Its dividend reinvestment plan approved by shareholders in 2018 will also apply to this proposed dividend, it said.

For FY20, the group is expected to achieve a satisfactory set of results, barring unforeseen circumstances, Leonard Ariff said.