Shares in Australian Pharmaceutical Industries jumped 4% yesterday as investors realised there were no shocks buried in the company’s 2016-17 annual results yesterday.
In fact the company, which owns a group of chemist chains, including the huge Priceline Pharmacy brand in fact topped its full year profit forecast that was downgraded only in August – unwelcome news that triggered a 10% price fall.
API, which also operates Soul Pattinson Chemist chain and is part of the Washington H Soul Pattinson/Brickworks group, reported an underlying profit of $54.2 million in the year to August 31, up 5.4% on the prior year, better than the company’s forecast of 5% growth. Revenue was up 5.8% at $4.1 billion.
API shares were up 4.4%, at $1.65.
An unchanged final dividend of 3.5 cents a share will be paid, making a total of 7 cents for the year, up from 6 cents a share.
The company said it ended the year debt free.
CEO Richard Vincent said growth in key categories, notably dispensary and over-the-count medicines, showed increased market share, while sales growth in beauty products eased.
“While the key beauty categories also grew during the year, it slowed on prior years with reduced consumer spending," Mr Vincent said in yesterday’s statement.
"API has retained a strong market position in its core businesses, despite the more challenging market conditions we faced during 2017, and we have further improved our balance sheet position."
The company expects weak consumer spending to continue in the current financial year, and will focus on the launch of new products in popular categories, and promote its instore services, including its personal beauty advisers.
A sign of the tough conditions was the 0.4% drop in like for like sales over the year. Over-the-counter medicines performed strongly but sales of beauty products fell.
But the Pharmacy Distribution saw revenues grow by 7.3% year-on-year to reach $2.956 billion while 20 new Priceline stores helped push its Retail sales 5% higher to $2.1 billion
This brought its Priceline network to a total of 462 stores and API expects to add another 20 stores in 2017-18.
