As expected, pharmacies supplier and retailer Australian Pharmaceutical Industries (API) has reported a whacking great loss for the first half of 2013-14 thanks to those big write offs announced just before Easter.
The company yesterday revealed a loss of $115 million, compared to a $12.9 million profit for the same period of the previous financial year.
API, which owns the Priceline, Priceline Pharmacy, Soul Pattinson and Pharmacist Advice brands, announced asset writedowns of $131 million, mainly related to changes to the value of its loans to pharmacies and a review of the expected growth of its retail network.
Discounting those one off losses, API said its underlying profit jumped 29% to $16.2 million for the latest six months.
That was also a point made in the update announcing the write-offs and was one of the reasons why the company’s shares held their ground after a kneejerk plunge on the news of the losses first hitting the market on the day before Good Friday.
As a result of the solid underlying performance, API has maintained its fully franked interim dividend of 1.5c a share.
Payment of this dividend was cleared by the company’s banks in the wake of the one off losses being announced because of a temporary breach of loan restrictions and an extension of 30 days to allow the company to rebuild its cash reserves.
API 1Y – API share price holds up despite losses
API directors repeated their previous forecast that "The company will have the capacity to maintain a fully franked final dividend to shareholders”.
API chief executive Stephen Roche said the impairment charges were regrettable, but the underlying profit showed that API’s strategy was working.
"We are demonstrating real retail expertise, providing independent pharmacists with an unrivalled range of channel choice via our Soul Pattinson, Pharmacist Advice and Club Premium programs and re-structuring our operations to meet the new market realities.
"Pleasingly our supply chain has been dealing with volumes up six per cent while keeping costs flat.
"As a result, we are making solid progress in all key operational and financial areas,” Mr Roche said in yesterday’s statement.
API said it expects its underlying net profit for the full year to be in the range of $28 million to $30 million.
Mr Roche said online sales in the six-month period reached $2.2 million, nearly a threefold increase on the same period last year.
Shares in API rose more than 8% to close at 58c, roughly where they ended the day before Easter when it revealed the big write downs and losses.
In fact the company seems to have survived the bad news quite well.
