Shares in pharmaceutical wholesaler Sigma Healthcare hit their highest level in more than two and a half years yesterday after the company revealed a solid upgrade to expected earnings.
The shares ended up 7% at 73 cents, the highest they have been since June 2018 and one of the stronger performances on Monday on the ASX
The driver was easy to spot – the revelation in the update that 2020-21 underlying earnings are expected to jump 35% after a surge in the final six months of the year to January 31.
CEO chief Mark Hooper admitted in the update that the company’s businesses had gone against expectations and will deliver earnings growth despite the challenges posed by COVID-19.
Sigma predicts underlying EBITDA for 2020-21 will hit $80 million.
“The business continued to perform strongly through the second half, with sustained momentum underpinning our FY21 guidance and confidence in FY22,” Mr Hooper said.
“Our ability to leverage investments already made will also see Underlying Return on Invested Capital return to double digits in FY21, and we continue to expect to achieve our previously stated target of $100 million Underlying EBITDA by FY23,” he added.
Sigma also confirmed it had extended a $250 million debt facility with Westpac for another three years, which will now mature in 2023.
The company’s net debt is $50 million as of January 2021 and is set to peak in the second half of 2022.
Mr Hooper added: “The next 12-months will see Sigma advance from a position of strength, with our entire infrastructure upgraded, a more efficient and scalable business model, and a strong balance sheet. This leaves the business in a prime position to accelerate growth.”
Sigma said it expects to announce its 2020-21 results on March 23.
