A decisive thumbs down from investors for the interim result from Sigma Healthcare’s which revealed profit plunged more than 80% to just $2.52 million.
The weak result was blamed on one-off restructuring costs as the company tries to reinvent itself after losing a huge supply deal last year. Sales revenue fell 4.1% to $1.88 billion for the six months to July 31 after Sigma lost its My Chemist/Chemist Warehouse supply deal.
Despite the slide, the company is maintaining interim dividend at one cent a share.
As part of the revamp, Sigma has closed its distribution centres in Shepparton in northern Victoria, Newcastle in NSW and Launceston in Tasmania while cutting 75% of the 300 warehouse and 200 agency jobs discussed in March when the 2018-19 results were released.
Non-operating net expenses rose to $8.68 million from $6.48 million, mostly due to the redundancies, site closures and transition program costs.
CEO Mark Hooper says those short-term hits will eventually bear fruit in the form of future savings, with the results in line with company expectations.
“Sigma’s fundamentals remain in strong shape as we continue to implement the changes to deliver sustainable benefits for our business medium to longer-term,” he said in a statement.
“We have made good progress on our business transformation program, and we are on track to deliver the $100-plus million efficiency gains in line with previous guidance.”
Sigma’s underlying profit over the period was down 43.6 percent to $11.2 million and the company cut its fully franked interim dividend by half a cent to 1.0 cents.
That was 95% of the underlying profit of $11.2 million, according to the statement yesterday.
Investors didn’t like the figures, the mixed messages in the commentary (the outlook wasn’t clear for the rest of the year) and the shares lost more than 1.6% to end at 60 cents after being down more than 4% at one stage.
