Revenue up, profit down as TWC rebrand speeds ahead

While costs associated with the Terry White and Chemmart merger hurt profits, the Terry White Group expects a sunny outlook

Terry White Group, the parent of TerryWhite Chemmart, has reported earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations of $8 million.

It also reported a net loss after tax of $864,000, which was due to planned integration and rebranding costs for the full year ended 30 June 2017.

TWG reported a 177% increase in total revenue to $91 million, including a 100% increase in service revenue to $50.7 million.

The group now comprises approximately 500 pharmacies.

TerryWhite Chemmart CEO Anthony White said the past year had been transformative for TWG, following its strategic merger with Chemmart.

Three-quarters of the group’s pharmacies now operate under the TerryWhite Chemmart banner, with the rest expected to have completed rebranding by the end of the year.

“The merger delivered significant growth in EBITDA from continuing operations and a 177% increase in revenue for Terry White Group, which reflects the size and strength of our business,” Mr White says.

“Although the retail environment remains highly-competitive and fragmented, we are confident the combined group now has a solid platform for future growth.

“Costs associated with the merger and integration impacted profit, but the underlying business remains strong and, with the merger now finalised, we are very focused, as a business, on harnessing the synergies of the two groups and leveraging the increased customer recognition from our rebrand to deliver uplift in earnings in the future.

“We have been working hard to integrate the businesses across marketing and merchandising, operations, store development and our corporate functions, and we are very pleased with how our teams are working together.

“All integration activities are on schedule and the work is expected to be completed by the end of the calendar year, which will allow us to take full advantage of the benefits of the combined businesses in FY18.”

He says the speed at which the rebranding has taken place has been “impressive”.

“We believe the distinctive green TerryWhite Chemmart signage is having a real impact in the pharmacy sector, with extremely positive feedback from customers to date,” he says.

“We are supporting our rebrand with a major investment in above-the-line marketing in the current financial year which will include the combined group’s first national consumer campaign, ‘Alive and Well’.

Mr White says the Group is well-positioned to leverage its scale, and increased levels of brand recognition amongst customers, to further build retail sales and improve results, despite current subdued retail trading conditions.

“The pharmacy sector is facing a great deal of change and we are constantly working to ensure our members, and our business, are in the best possible position to deal with the challenges that lie ahead.

“We have a clear value proposition, a well-defined retail and digital strategy, and a vision to become Australia’s favourite pharmacy.

“This will be our foundation in FY18 and it is exciting to see this already coming through in our landmark ‘Alive and Well’ campaign, which focuses on our commitment to provide the most qualified and accessible pharmacists, the best health programs and excellent value storewide.

“With the scale and synergies achieved from bringing the two groups together, and the compelling value proposition built for our members and customers around health, we believe TerryWhite Chemmart is well-positioned to play a key role in the delivery of a strong, broader health system for the country and deliver enhanced earnings and improved shareholder returns in the future,” says Mr White.

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