Pharmacybrands annual profit climbs 33 percent , may trim range of brands

Tuesday 28th May 2013

Pharmacybrands, the retail pharmacy and medical centre owner, lifted annual profit by a third in the latest financial year amid a cost-cutting drive which will see the company trim its range of brands.

Net profit rose to $13.3 million, or 10.71 cents per share, in the 12 months ended March 31, from $9.9 million, or 8.72 cents, a year earlier, the Auckland-based company said in a statement. Those gains from cost savings across the company's pharmacies, increased sales from acquisitions and the removal of one-off costs from the prior year, it said. Revenue slipped 0.5 percent to $105.1 million.

The shares fell 5 percent to $1.33, having gained 20 percent this year.

"The company is focused on expanding its primary healthcare offering," chairman Peter Merton said. "In the pharmacy division, decisions have been made to rationalise the brands and move to a single loyalty programme."

The company didn't offer any formal guidance, with Merton saying there were "modest signs of improvement in retail revenues" after a challenging environment for the sector.

The retail unit lifted net profit by a quarter to $14.8 million, even as sales fell 3.9 percent to $96.8 million. Medical services profit more than doubled to $1.7 million, with a 73 percent gain in sales to $8.3 million.

The board declared a full imputed final dividend of 3.5 cents per share, payable on June 21 to shareholders on the register on June 12. That takes the total annual payout to 5.5 cents per share.

Shareholders agreed to a dividend reinvestment plan, which would let them forgo a cash return in favour of receiving more shares, to let majority shareholders Cape Healthcare and LPL Trustee participate without breaching Takeovers Code requirements.

Cape Healthcare and LPL Trustee each hold a 30.4 percent stake in Pharmacybrands and based on the company paying a similar dividend over the next five years, could potentially increase their respective stakes to 35.1 percent.

The dominant shareholders came out of a 2009 deal when NZX-listed Life Pharmacy, whose brands included Life Pharmacy, Life Metro and Care Chemist, made a $20 million all-scrip offer for Pharmacybrands, the country's then-biggest retail pharmacy group with the Amcal and Unichem brands.

BusinessDesk.co.nz

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