Sigma Pharmaceuticals’ (SIP) shares jumped 9.3% to 94c yesterday after the drugs wholesaler and distributor said earnings (EBIT) grew 11% before interest and tax in the year to January.
As a result, shareholders will receive a two cents per share final dividend plus a one cent per share special dividend, both fully franked.
The company didn’t pay an interim dividend. A dividend of 2c a share was paid in 2014.
The company reported EBIT of $78 million, up from $70.3 million the previous year.
Net profit after tax eased to $52.7 million, down from $53.5 million the previous year.
But the latest result was better than it appeared because the 2014 result benefitted from a tax-free one-off gain of $10.9 million from the sale of its Clayton premises in Melbourne.
Sales revenue for the year was up 5.7% to $3.1 billion.
“This is a very strong result for Sigma,” CEO Max Hooper said yesterday.
"We know we’re operating within the restrictions of ongoing Pharmaceutical Benefit Scheme reforms, yet we’ve still managed growth in revenues and substantially improved our efficiencies. This sets up a strong platform for Sigma."
SIP 1Y – Sigma lifts earnings
Sigma chairman Brian Jamieson commented that it was pleasing to be able to pay the dividends "after insufficient franking credits resulted in the decision not to pay an interim dividend earlier this year.
"These dividends result in 62 per cent of net profit after tax being paid to shareholders as a dividend. We expect to continue paying fully franked dividends into the foreseeable future,” he said.
Mr Hooper said the company’s outlook was strong, with growth in the year ahead “in line” with the results to January 2015. Full year contributions from the Central Healthcare Services and Discount Drug Stores acquisitions are expected to exceed $400 million in revenue and $8 -$10 million in EBIT.
Updates on the sixth Community Pharmacy Agreement, now under negotiation with Canberra (and due to finalised in June), will be provided at Sigma’s Annual General Meeting on May 6.
Earlier in March Sigma announced it would spend $100 million over three years on new warehouses and launch a range of beauty and healthcare initiatives to boost revenue from products outside of the declining prescription medicines segment.
