The API group has released its 2020 full year results, with reported earnings before interest and tax (EBIT) of $4.4 million and reported Net Profit After Tax (NPAT) of minus $7.9 million (loss)
In a statement API said that the group’s focus has been on maintaining the safety of its employees, pharmacists and their customers.
As a vital health service, pharmacy distribution and Priceline Pharmacy stores remained open throughout the pandemic, “with no significant impact on the delivery of mediciines”.
However, Priceline company-owned non-pharmacy stores and the Clear Skincare clinics were closed for periods of up to 17 weeks. In Victoria, these stores are expected to re-open soon.
Altogether, API’s underlying EBIT was $56.3 million to the year ending 31 August 2020, down 40.1% on the previous year.
The underlying NPAT was $32.5 million, down 42.6% on the previous year, which API says is due to the impact of COVID-19.
However, total group revenue was $4 billion, an increase of 0.2% on the prior year, despite the lockdowns.
“This result is testament to the strength of API’s combined portfolio of businesses,” said API CEO and managing director Richard Vincent.
“Pharmacy Distribution revenue excluding Hepatitis C increased6.1%which demonstrates the resilience of that business throughout COVID-19.
“With half of API’s revenue coming from its retail businesses, we were exposed to the impact of mandatory lockdowns to non-pharmacy Priceline stores and Clear Skincare clinics.
“At Priceline Pharmacy we invested significantly in strengthening our Sister Club loyalty program and health offering.
“We took the opportunity COVID-19 presented to build out our omni channel offer with the rapid rollout of Click &Collect across the network and the addition of Click &Deliver.
“This contributed to our online sales increasing by 69% on the prior year but with growth of more than 100% since March.
“From a capital management perspective, we made significant improvements before and during COVID-19, we built on our strong net debt position from the first half and further improved our cash conversion days.
“These improvements have been driven through an inventory optimisation program that introduced world leading artificial intelligence machine learning, utilising real time consumer behaviour and buyer data, in addition to further improvements in debtor and creditor management.
“These improvements will enable further growth in Priceline Pharmacy and Clear Skincare.
“Our ongoing cost reduction program that included the closure of two Distribution Centres has driven a significant reduction in our cost of doing business to 10.2%3, a reduction of 70bps on the pcp,” Mr Vincent said.
API also reported the write down of the Soul Pattinson Chemist brand name of $37.5 million (pre-tax) and restructuring and reorganisation costs totalling$12.3million(post-tax).
At Priceline Pharmacy, total network sales for the year ending 31 August 2020 were $2 billion, down 5.2% on the prior year.
Like-for-like sales for the front of shop, declined 5.98% on the prior year and declined 2.6% including dispensary.
Gross profit was down 14.3% on the prior year, which API says reflects a move away from high margin categories including colour cosmetics and cold and flu medicines as COVID-19 changed customer buying patterns.
“This result reflects the strength of the Priceline Pharmacy brand, given that 22 of our non-pharmacy stores were closed during the mandated Victorian closures of non-essential retail,” Mr Vincent said.
“Also, those Priceline Pharmacy stores located in the nation’s CBDs or in non-grocery sections of major shopping centres saw sharp drop-offs in foot traffic during the pandemic’s worst periods.” “Consumer behaviour has shifted considerably during the year. Shoppers are much more value and health conscious,” he said.