UPDATE: Sigma Returns To Profit On Market Share, Cost Savings
22 March 2012 - 4:14PM
Dow Jones News
Australian pharmacy owner and medicine distributor Sigma
Pharmaceuticals Ltd. (SIP.AU) said Thursday it returned to profit
in fiscal 2011 following two years of losses after gains in market
share and cost savings.
The company said in a statement net profit for the 12 months to
Jan. 31 was 49.2 million Australian dollars (US$51.4 million), up
121% from the previous year's loss of A$235.4 million.
"Sigma continues to build an increasingly more efficient
business that will manage market competitiveness into next year,"
said Chief Executive Officer Mark Hooper in a statement.
The company, which owns the Amcal, Guardian and Amcal Max
pharmacy brands, said revenue for the year was A$2.85 billion, down
2.1% from last year's A$2.91 billion because of government reforms
to its subsidy scheme for medicines, the Pharmaceutical Benefits
Scheme, and Pfizer Inc.'s (PFE) decision to distribute directly to
pharmacies.
"Although major PBS reforms are expected to dampen sales, we
will continue to respond through cost reduction measures and the
re-negotiation of customer terms to negate the impact on Sigma's
business," Hooper said.
UBS analyst Andrew Goodsall told Dow Jones Newswires that while
the result was good and praised management, Sigma faced looming
headwinds as the federal government prepared to cut prices paid
under the PBS on April 1, which would affect 30% of Sigma's
business.
"Sigma will have to run fast to stand still," he said of future
earnings.
Hooper acknowledged during a conference call with analysts that
PBS reforms could see PBS growth for Sigma be negative for the
first time this year.
As well as cutting costs and renegotiating terms with customers,
Hooper said Sigma would implement a new retail strategy through
stores and the internet to bolster growth.
He said the company intended to maintain a high dividend payout
ratio in the future.
The company said it would pay a final dividend of 2 Australian
cents a share, and a special dividend of 1.5 cents a share. Last
year the company did not pay an interim or final dividend but a
special dividend of 15 cents a share.
-By Gavin Lower, Dow Jones Newswires; 61-3-9292-2095;
gavin.lower@dowjones.com