Sigma manages “growth through challenging times”

Pharmacy brands like-for-like sales up 8.7% in spite of COVID hits, half yearly report shows.

Sigma Healthcare has experienced what it describes as “organic growth” across its pharmacy brands and wholesale operation though with “slightly lower sales and supplier income due to lockdowns,” the company’s half-yearly report says.

In the report – entitled “Growth through challenging times” – Sigma downgraded its outlook for FY22 on earnings before interest, taxes, depreciation and amortisation  (EBITDA) to “closer to 5%”, down from the 10% target cited in its March annual report, “reflecting the increased impact and uncertainty from COVID-19 restrictions in 2H22”.

The company’s Underlying earnings before interest, taxes, depreciation and amortisation  (EBITDA) was up 14.7% to $39.2 million with Reported EBITDA up 42.9% to $17.7 million

It again underscored there was “no reliance on COVID-19 related funding” a.k.a. JobKeeper.

Group revenue was up 5.5% to $1.7 billion and it had a net debt of $82 million at the end of 1H22.

It said that “overall COVID-19 had a slight negative impact on the first half, mainly in relation to sales and promotional income”.

Effects on its operation included “significant impact on major CBD and airport pharmacies especially in Melbourne and Sydney”. Sigma’s pharmacy brands include Amcal, Chemist King, Discount Drug Stores, Guardian and Pharma Save.

There was also an increase in operating costs to comply with COVID-19 regulations, it said.

However, there had been no repeat of the panic buying seen in March/April 2020 – particularly on higher margin personal protection equipment – one element which had offset the impact of earlier COVID disruptions.

Under the heading “Organic growth in Pharmacy continues” it showed overall wholesale sales up by 13.6 per cent, which included “the positive impact” from sales to Chemist Warehouse (CW).

Sales excluding CW were up 3.0% on last year, which it said was “in line with market”.

While PBS growth was around 6%, OTC growth was down 3% to 4%, it said.

It noted the decline was partly due to “ongoing impact from lower diagou activity and export sales”.

The more modest appraisal comes in the wake of its March full year report, which declared “a milestone” result” with underlying EBITDA of $81.1 million, a net profit after tax of almost $60 million and a return to dividends for shareholders, which remain in place at one cent per share and will be paid on 8 October 2021.

The report is CEO Mark Hooper’s swansong with the company. He announced his resignation in late April and is due to finish his tenure by the end of October. The report said his successor will be named “in the near future”.



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