SigmaPharmaceuticals is paying an interim dividend of 2 cents a share (none previously) after lifting underlying half year profit as it becomes less reliant on revenue from the Pharmaceutical Benefits Scheme (PBS).
“IMPORTANTLY for Sigma, our growth in profitability is being achieved from the significant steps taken to diversify our business to be less reliant on PBS revenue to deliver earnings growth,” the company pointed out in yesterday’s half year profit statement.
"Over 56 per cent growth in `other revenue’ is testament to this, contributing to non-PBS revenue now representing 43 per cent of total revenue, which is up from 40 per cent the same period last year."
Sigma’s statutory net profit fell 15.5% to $18.9 million in the half year to July 31, from $22.4 million in the first half of 2014-15, after stripping out accounting adjustments related to the acquisition of Discount Drugstores and Central Healthcare in 2014. Sigma’s underlying net profit jumped a solid 23% to $27.6 million.
The better than expected performance by Discount Drug Stores and Central Health Care businesses led to an additional purchase consideration of $8.7 million, which was taken in the group’s latest results.
Sigma said its focus on broadening its earnings mix, improving pharmacy services and management of costs had contributed to the strong start to the group’s 2015-16 fiscal year and the outlook for the remainder of the 2016 financial year and beyond was positive.
Our strategy over the last four years has delivered,” Sigma chief executive Mark Hooper said in yesterday’s statement.
“Looking forward, we are confident that organic growth combined with services-based income, and the earnings mix shift will deliver sustainable growth in the second half and beyond,” he added.
As part of that Sigma is looking to boost investment in its businesses by upwards of $60 million over the next 18 months – $10 million over the rest of the 2016 year and between $40 and $50 million in 2016-17.
Revenue was up 11.5% to $1.67 billion in the half, from $1.5 billion a year earlier.
“With the initial uplift from the acquisition now cycled through, we anticipate our full year growth rate will return to levels consistent with the growth achieved in the FY2015 results,” Mr Hooper said in yesterday’s statement.
Despite the positive result, the shares lost ground in yesterday’s slide and finished down half a per cent at 75.5 cents.
