Australian Pharmaceutical Industries releases what is expected to be an uninspiring annual profit later today.
But at least it won't be the confused result from last year when computer problems 'ate' more than $17 million in sales, producing one-off losses of $24 million, andsignificant management changes.
The release comes after API tried to soften the market late Tuesday witha return to profit, but with a downgrade suggested.
It also indicated it was looking at selling some of its retail interests.
The news produced speculation that rival retailer, distributor and manufacturer, Sigma Pharmaceuticals, was thinking of renewing its interest in API.
But those media reports yesterday produced a denial from SIP's CEO, Elmo de Alwis.
"What I said was, we still believe that there is value in industry consolidation taking place," Mr de Alwis said in a story issued by AAP.
"The original value we saw in a consolidation transaction still remains, but we haven't looked at API (again) or done anything.
"We can't say that we're interested."
Sigma twice tried to snuggle up close to API last year, using 'indicative' offers. The last, which ended in December, was for $2.20 a share. The first was for around $2.50 a share.
Neither were hard, real offers, merely expressions of being interested, if API was interested.
API shares traded at $2.29 yesterday ahead of today's result, while Sigma's shares continued their recent slide, ending around $2.18.
Sigma have fallen 9 per cent, or 22c from around $2.40 at the start of this month as investors have fretted over its involvement in a possible bidding war for Symbion.
Sigma tried last week to muscle into that deal but was excluded by the terms of an agreement between Symbion and bidder, Healthscope, and an inability to offer a sufficiently attractive price to get Symbion's interest.
Sigma has now walked away from Symbion, which will relieve some analysts and big shareholders who were becoming concerned that SIP was allowing itself to be diverted.
The ACCC rejected a merger proposal between Sigma and API back in 2002, and although there's now a fourth player in the distribution business, SIP, API and Healthscope all hold significant stakes in the retail, distribution and wholesaling side of health care.
That makes any rationalisation between the three problematic.
As well, Healthscope's ambitions for Symbion's pathology business have attracted the attention of the ACCC which has already warned of problems in Victoria and perhaps in several other states.
Attention now turns to nitty gritty of API's results later today. Citigroup is understood to have a 7 per cent fall in net earnings factored into its forecasts.
In that statement late Tuesday, API said that it was considering selling its Price Attack and House brands.
API's retail operations include the Priceline health and beauty stores, Priceline Pharmacy, hair care chain Price Attack, and the House homewares outlets.
Hair Attack and House are obviously peripheral to the pharmacy side of the business and the manufacturing and wholesaling businesses.
API said the performance of its pharmacy division, which distributes pharmaceuticals, had improved.
"In the past six months, we have had informal offers for the House and Price Attack brands," API managing director Stephen Roche said.
"We are now evaluating if the sale of either or both brands is in the best interests of shareholders.
"API has not committed to sell the brands and will assess this following any formal bids."
API has about 139 Price Attack stores and around 100 House stores. Both are franchised.
Significant items in the second-half financial results included the outcome of asset reviews for the Price Attack and House brands.
However, Mr Roche said the Priceline Pharmacy franchise recorded like-for-like front of store growth of 14 per cent, year on year.
"As the model is working consistently well, we are aiming to increase the rate of store rollout," Mr Roche said.
API said it expected earnings before interest, tax and depreciation (EBITD) before significant items for the second half of the 2006-07 financial year of $36.4 million.
EBITD after significant items would be $30.2 million for the second half.
API had said last December 2006 that EBITD was expected to be restored to that of the prior corresponding period of about $39 million, before one-off items.
So $2.9 million short and another year of underperformance.
