Shares in wholesaler/retailer Australian Pharmaceutical Industries (API) fell yesterday after the company confirmed its return to profit and committed to the continued expansion of its network of Priceline stores.
The shares eased 4.4% to $1.735, underperforming the wider market which staged a mid session rebound from a weak start.
Investors ignored a solid final dividend and higher payout for the year. The final was lifted half a cent to 2.5 cents a share, taking the total for the year to 4.5 cents, up more than 28%.
API owns the Priceline, Priceline Pharmacy, Soul Pattinson and Pharmacist Advice pharmacy banners, and reported profit of $43.1 million for the year to August 31.
That was a big turnaround from a $90.8 million loss in the previous year caused by a series of write-downs.
“API is delivering on our strategy of transforming from a pharmacy wholesale business into a leading retailer with the synergy of a reliable, cash generating pharmacy distribution business,” chief executive Stephen Roche said in yesterday’s statement.
Priceline and Priceline Pharmacy saw a 10.4% lift in retail sales in the year (sales at registers and excluding pharmaceutical dispensary sales – to $1.05 billion).
Like-for-like store sales rose a solid 4.5%.
API 1Y – Priceline sales drive Australian Pharmaceutical
During the year, API added 30 Priceline and Priceline Pharmacy stores, taking the total to 420, and it expects to add at least another 20 outlets in 2015-16.
The company’s online stores are generating 10 million page views per month, API said.
Sales in its pharmacy distribution business were flat at $2.4 billion, as reforms to the Pharmaceutical Benefits Scheme (PBS) caused price falls, and some customers were lost to competitors.
Underlying revenue, excluding the impact of the PBS reforms, was up 6.5% on the previous year.
Total revenue from all sources was up 3.3% to $3.46 billion.
Mr Roche said that was in line with expectations and fulfilled the role API wanted the business to play.
"We want this business to be a predictable source of earnings and cashflow, and it is an important part of our long term performance," he said.
