Sigma looks to new year after rough half

Pharmacies and drug supplier Sigma Healthcare says the outlook for fiscal 2019 is more positive after a challenging first half in the current fiscal year.

The operator of retail chains including Amcal and Discount Drug Stores has lifted its half-year net profit the six months to July 31 by 17.4 per cent to $27.8 million, but sales fell amid challenging industry conditions.

Underlying earnings before interest and tax (EBIT) fell 8.7 per cent.

Sigma said sales were impacted by a pull-back in sales of low-margin Hepatitis C medicines and softer consumer sentiment.

Adjusting for the lower Hep C sales, sales revenue was down 1.4 per cent.

Chief executive Mark Hooper says a number of factors point to a more positive outlook for fiscal 2019.

“The signs are good that momentum is swinging back in our favour,” Hooper said in statement on Thursday.

“This is supported by a combination of our pipeline of pharmacy brand members, service improvements and efficiency gains from Project Renew and the opening of our Berrinba distribution centre in Queensland, along with the ramp-up of new service contracts in hospitals and logistics.”

Sigma confirmed its guidance, provided on August 11, of underlying EBIT of $90 million for the full 2018 fiscal year.

It also has agreed to buy dose administration services provider Medication Packaging Systems (MPS) for $18.5 million.

Hooper said the acquisition fits in with the company’s strategy of becoming a broader healthcare company and MPS provided another avenue of growth.

“We have achieved a sustained period of above market growth over the past few years,” said Hooper. “So whilst the current year was influenced by some unexpected events, these are being addressed. This has intensified our focus on our strategy and business development pipeline, including today’s announcement of the acquisition of MPS. It also reinforces our belief that we are on the right track and can return to growth in FY19 and beyond.”