Australian Pharmaceutical Industries has been warning of a weak performance in the year to September for the company (which is part of the Milner family’s Washington H Soul Pattinson group) and it duly delivered on that promise with an 8% fall in after-tax earnings.
But directors till lifted dividend half a cent to 7.5 cents a share with the final of 4 cents (up half a cent from a year ago).
Investors though noted the confirmation of the weak performance and an equally ‘damp’ outlook for 2018-19 (the company expects to increase profit, with no figures given) and knocked the shares down 2.2% to $1.68.
API preferred to report underlying net profit after tax of $54.7 million – up just 0.9%. That figure excluded $6.6 million in one-off costs associated with the Clearskin acquisition and $4.1 million in restructuring costs.
The statutory after-tax profit reported was $48.2 million, which is what investors focused on.
Total revenue for the period was down slightly to $4.0 billion, “reflecting a drop in demand for Hepatitis C medicines of approximately $155 million.”
The shares eased 0.3% to $1.73.
The company said that excluding Hepatitis C medicines revenue increased by 3.3% to $3.75 billion on the 2016-17. Underlying EBITDA was down 1.5% to $118.7 million, primarily due to the effect of an increased number of price reduction cycles in the PBS during 2017-18 and exclusive direct distribution arrangements.
Pharmacy Distribution grew to $2.7 billion (excluding Hepatitis C Medicine) up 4.7% on the prior year.
Priceline and Priceline Pharmacy recorded register sales (including dispensary) growth of 2.1% on prior year to $2.1 billion.
Priceline and Priceline Pharmacy network grew to 475 stores, adding 13 new stores during the year.
API said that Pharmacy Distribution sales were consistent with prior year at $2.9 billion. Excluding Hepatitis C Medicine, overall reported sales growth was 4.7%.
“Adding back Pharmaceutical Benefits Scheme (PBS) reforms, the underlying sales growth was 6.4%. The business grew independent accounts as well as a number of large pharmacy groups, demonstrating that pharmacists preference API due to the tailored programs to suit the individual business needs of the pharmacists.”
The New Zealand manufacturing segment recorded an increase in profit to $2.8 million. “Continued focus on profitable market segments, has resulted in the winning of new contracts to support the growth of the healthcare range in Australia and New Zealand as well as the Personal care product range in other export markets.”
API completed the first stage of the Clearskincare (CSC) acquisition in July 2018. API said it paid $61.6 million and received 50.2% of the Clearskincare Clinics and 100% of the Clearskincare Products business. The acquisition was funded through new medium-term debt facilities of $65 million.
“The Clearskincare acquisition positions API as a leading Health and Wellbeing company in Australia. Clearskincare as leading provider of non-invasive aesthetic services is differentiated by its focus on skincare treatments with all procedures reviewed by medical doctors. The beauty services industry remains largely fragmented with no brand having a decisive market share.
“With consumer adoption rates increasing, combined with API’s proven network expansion capability, the Clearskincare acquisition provides a strong platform for growth,” API claimed.
