Sigma restructuring pain

SIGMA Healthcare says its current business transformation program is “on track,” after announcing a significant fall in profit as it adapts to a new environment without the My Chemist/Chemist Warehouse business (PD breaking news).

The company’s statutory net profit of $2.86 million for the six months to 31 Jul was just a fifth of the $13.77m result for the previous corresponding period, with CEO, Mark Hooper, saying the figures reflected some of the one-off restructuring costs under the company’s Project Pivot revamp, as well as only five months of sales to the Chemist Warehouse group.

Excluding Chemist Warehouse and Hepatitis C medicines, revenue from the company’s “ongoing business” was up 6.9%, while the figures were also impacted by a reduction in wholesale supplier rebates due to the loss of Chemist Warehouse volumes.

“Sigma has made significant progress in implementing the program of work to deliver the $100+ million efficiency gains.

“The changes implemented to date occurred towards the back end of 1H20, and therefore there is minimal benefit realised in the 1H20 results,” Hooper said.

Annualised costs worth over $33 million have already been removed from he business, relating to the loss of about 375 jobs.

Sigma’s pharmacy brands “performed ahead of the market on a like-for-like basis,” Hooper noted, with sales up 7.8% (excluding Hepatitis C) as the company helped members build their businesses.

Member numbers remained steady during the six month period “however a strong pipeline of prospective members brings greater optimism for growth for the next 12 months and beyond”.

Hooper said the hospital pharmacy market as well as the dose administration aids services market continued to be focus areas.

“Sigma is entering a growth phase where we have few business constraints,” he said, with the company well placed to actively pursue new distribution opportunities, hospital pharmacy and retail pharmacy customers.