Drug manufacturer and distributor, Sigma Pharmaceuticals (SIP) has met its annual earnings forecast and said net profit would rise 7% this year, propelling its shares up 5%.
This is despite the group reporting 24% decrease in net profit after tax to $77.2 million, from $101.8 million in the previous year.
However, its underlying net profit after tax of $90.2 million for the 12 month to 31 January 2008 is in line with guidance given in September of $88 – $93 million.
Sigma says it achieved the current guidance through the stronger second half performance of the pharmaceutical division and consolidation of previous market share gains in the healthcare division.
Sigma’s managing director, Mr Elmo de Alwis, said the result reflected management’s commitment to addressing the key business issues that confronted Sigma during the 2007/08 year.
“We have delivered an underlying net profit after tax within the current guidance range, driven by a strong second half performance.”
“While we still have a way to go, consolidation of the past twelve months of growth in healthcare has been achieved,” he said.
Sales revenue growth for the group of 9.9% comprises 13.6% growth in the healthcare business and a reduction of 2.1% in the pharmaceutical business.
“The growth in healthcare sales revenue was achieved against a backdrop of regulatory changes introduced during the year, market participant uncertainty, and relatively flat PBS growth,” the group said.
In regard to the fall in the pharmaceuticals division, Sigma said the drop reflects a continued reduction in the percentage of total sales attributable to our low margin distributed products sales channel as well as the heightened competition within the generics market.
"Higher costs of borrowing for all market participants will lead to significantly higher interest costs for 2008/09," de Alwis said.
The group declared a final dividend of 4 cents per share, fully franked and payable on 23 April 2008, bringing the full year dividend to 7 cents per share. This is down from the previous full year’s dividend of 8.6 cents per share.
Sigma Pharmaceuticals rose on claims of an improved outlook. It finished 4.5 cents or 3.6% higher at $1.27.
