Doing business under COVID: API reports results


Priceline Pharmacy outdoor shot

API says it is well placed to compete in an environment affected by COVID-19, citing the success of initiatives like Priceline’s Click and Collect

API presented its 2020 half-year results in which it said there would be no interim dividend, due to a “prudent approach to preserve cash in the current environment”.

API’s total revenue was $2 billion, 2.8% up on the prior corresponding period. Its underlying earnings before interest and tax (EBIT) was $41.7m, down 6.1% on the pcp, while its underlying net profit after tax (NPAT), excluding AASB16 leases, was $26.3m, down 1.9% on the pcp.

The company’s reported EBIT of $39.3 million was down 11.5% on the pcp and reported NPAT of $22.5m down 9.9% on the pcp.

API’s CEO and managing director Richard Vincent said that “critically, entering the current environment, API’s financial position has strengthened as a result of our net debt reduction following the combination of debt repaid with the proceeds from the sale of our Sigma shareholding, and improved working capital and cash conversion”.

API’s statement on the results says that the company is “very well placed to compete in the new environment, having lowered its cost of operating, strengthened its balance sheet, evolved its customer offer based on customer insights and invested in growth assets”.

“In our Priceline Pharmacy network, we had already understood consumers’ shift to being more health and value conscious and had begun to leverage our offering and cost base to reflect that before COVID-19 hit,” Mr Vincent said.

“We have developed stronger credentials through machine-driven in-store health checks, medicine management apps, dose administration aid programs and a broader health product offering.

“We launched Click & Collect during the half and subsequently were able to rapidly deploy Click & Deliver during the COVID-19 pandemic, leveraging our store network to efficiently distribute to our customers.”

The company says that as vital parts of the national health infrastructure, both Pharmacy Distribution and Priceline Pharmacy are expected to remain operational during the COVID-19 pandemic.

“Throughout our operations, and particularly in our distribution centres and pharmacies, we have structured and separated our teams with safety and continuity of service in mind,” Mr Vincent said.

“Where we had instances of COVID-19 infection, involving our Priceline Pharmacy teams, we’ve been able to work successfully with the franchisees and the State Health Departments to quarantine those who required it, deep clean the affected areas, get replacement staff in situ and re-open 24 hours later.

“We are well placed to cope with any future outbreaks wherever they may occur within our business network,” Mr Vincent said.

API said that Priceline’s like-for-like sales, excluding dispensary, were 1.3% down on the pcp and when dispensary was included like-for-like sales were up 0.9%.

The total Priceline store network stood at 488 at 29 February, up by a net nine stores on the pcp.

“We had already begun to enhance the brand position to tap into a softer and highly competitive retail market, which was compounded by the bushfires,” Mr Vincent said.

“Our positioning through a change in product mix, service focus and targeted offers meant we were able to hold market share across the health, personal care and beauty segments.

“We launched ‘Click & Collect’ nationally before Christmas and since the end of the half we have rapidly deployed ‘Click & Deliver’, providing our customers with a range of convenient purchasing options,” Mr Vincent said.

API said that Priceline stores, including pharmacies had seen foot traffic drop off in CBD and major shopping centre locations.

“API will continue to monitor the financial performance of its Priceline network with the intention of keeping stores open and people employed where it is safe to do so. API has entered negotiations with landlords and in most instances those negotiations are proving fruitful,” it said.

However Mr Vincent reportedly told listeners to a conference call that “we are not afraid to permanently close stores or [Clear Skincare] clinics,” if such negotiations are not fruitful, Fairfax Media reported.

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