Sigma Healthcare Announces Half-Year 2024 Financial Results
SIGMA HEALTHCARE LIMITED (SIG) Share Update September 2024 Tuesday 24th
Sigma Healthcare Reports Mixed Financial Results for Half-Year 2024
Sigma Healthcare Limited has released its financial results for the half-year ended 31 July 2024, showing a mixed performance with significant revenue growth but a notable decline in net profit.
Instant Summary:
- Sales revenue increased by 9.4% to $1.84 billion.
- Net profit after tax dropped by 66.9% to $3.7 million.
- Interim dividend of 0.50 cents per share declared.
- Successful onboarding of a new 5-year Chemist Warehouse Group (CWG) supply contract.
- Like-for-like sales up 13% in Amcal and Discount Drug Store brands.
Revenue Growth Amidst Profit Decline
Sigma Healthcare Limited reported a 9.4% increase in sales revenue, reaching $1.84 billion for the half-year ended 31 July 2024. This growth was largely driven by the successful onboarding of a new 5-year supply contract with Chemist Warehouse Group (CWG), which is expected to contribute $3.0 billion in annualized revenue.
Despite the revenue growth, net profit after tax (NPAT) dropped significantly by 66.9% to $3.7 million, compared to $11.2 million in the previous period. This decline was attributed to $8.0 million in one-off costs related to the CWG merger proposal and $2.0 million in upfront costs for the CWG supply contract.
Operational Highlights
The company's core brands, Amcal and Discount Drug Stores, saw like-for-like sales growth of 13%, reflecting strong brand execution and customer loyalty. Sigma's logistics network also demonstrated improved productivity, absorbing a 9% increase in outbound volume while keeping costs relatively flat.
Group revenue rose 9.4% on a statutory basis and 17.3% on a normalized basis, after adjusting for discontinued hospital revenue. The company's distribution centers were able to efficiently handle the increased volume without significant additional capital expenditure.
Financial Performance
Statutory EBITDA for the period was $20.0 million, down 45.7% from the previous year. The company's gross profit margin was slightly down by 0.1% to 6.5%, reflecting a shift in product mix and the impact of ongoing PBS government price reforms.
Depreciation and amortization expenses decreased by 8.6% to $13.1 million, while net finance income improved to $1.3 million, primarily due to interest income from a $400 million equity raise completed in January 2024.
The mixed financial results are likely to have a varied impact on Sigma Healthcare's stock. The revenue growth and successful onboarding of the CWG contract are positive signs, but the significant drop in net profit and the associated costs of the merger proposal may weigh on investor sentiment. The interim dividend of 0.50 cents per share, although unfranked, could provide some reassurance to investors.
Investor Reaction:
Analysts are expected to have mixed reactions to Sigma Healthcare's financial results. While the revenue growth and new CWG contract are positive developments, the steep decline in net profit and the associated costs may raise concerns. Investors will likely be looking for more clarity on the long-term benefits of the CWG contract and the company's strategy to improve profitability.
Conclusion:
Investors should closely monitor Sigma Healthcare's strategic initiatives and their impact on future financial performance. The company's ability to capitalize on the new CWG contract and manage costs effectively will be crucial in maintaining investor confidence. Subscribe to our newsletter for regular updates and in-depth analysis on Sigma Healthcare and other stock market news.