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API dispenses bumper profit rise

Priceline-Store-Front-oAustralian Pharmaceutical Industries (API) has reported a 27 per cent increase in net profit after tax for the six months to February 28 boosted by the higher revenue at its enlarged Priceline Pharmacy chain.

The company’s net profit rose to $29.1 million for the half year, from $22.9 million a year earlier, with revenue up 12.7 per cent at $2 billion.

API opened 25 new Priceline stores over the past 12 months that have helped the company deliver a 7.2 per cent increase in total network sales; a two per cent rise in sales, excluding dispensary items; and a 0.4 per cent lift in comparable sales.

The company’s New Zealand business saw a decline in earnings due to “the reduced demand in contract manufacturing for Australian businesses from the changes in scheduling and a PBS listing of key products,” with API expecting the demand to return during the second half after securing new contracts early this calendar year.

“We have increased NPAT and returns to shareholders through organic growth in our Priceline Pharmacy network, despite the slower retail conditions in 2017, while generating cash and sustainable returns through our pharmacy distribution business,” said API’s CEO and managing director Richard Vincent.

Return on equity had a compound annual growth rate of 19.1 per cent since the first half of 2015 and return on capital employed had a 13 per cent increase in the same period. Working capital improved on all key metrics on the previous corresponding period and inventory returned to normal levels for the seasonal trading period, the company stated.

Reported net debt decreased $84.4 million from the same time last year and is expected to again decrease in the second half.

“We are focused on increasing shareholder value and we still forecast that we will be cash positive by the calendar year end,” Vincent said.

API is looking to expand its store network by “at least 20 stores” during the current financial year to 462.

“We anticipate that consumer sentiment is likely to remain more challenging than in previous years, however we remain confident in our retail store pipeline and in reducing operational costs as a consequence of our prior capital investments,” said Vincent.

“API expects another year of record full year net profit after tax, a minimum 10 per cent up on FY16, assuming the current trading conditions persist.”

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