Ebos expects continued rise in productivity

AUCKLAND: Pharmaceuticals and petfood company Ebos demonstrated how it will improve productivity and hinted at potential acquisitions and other avenues for growth at its latest investor day.

In its presentation filed with the New Zealand stock exchange, Ebos says that since it opened its new warehouse in Victoria, Australia, in October 2015, its productivity has increased more than 50%.

It is expecting similar improvements in productivity and cost improvements from its new 10,000 sq m warehouse in Brisbane which opened on October 15.

Ebos is also expecting productivity at all its warehouses in Australia to improve once its $A1 billion ($NZ1.06 billion) contract to exclusively supply the Chemist Warehouse Group’s more than 400 chemist stores with pharmaceutical products kicks in from July 1 next year.

That contract will make Ebos Australia’s largest community pharmaceutical wholesaler — it already supplies the Terry White Chemmart Group and is in the process of buying the 50% of the Terry White franchisor it doesn’t already own for $A50 million.

Driving efficiencies and cutting costs is a key part of Ebos’ strategy, as is buying addon or adjacent businesses.

The company says it is looking for other investments in community pharmacy management companies. It is also looking for acquisition opportunities in the medical consumables sector.

Ebos, which this year expects to achieve a return on capital employed in excess of 15%, achieved a 15.8% return in the year ended June, down from 16.4% the previous year.

It has completed 20 deals since 2000.

Ebos has bought a number of consumer brands over the last few years, including Red Seal and AntiFlamme for humans and pet brands such as Black Hawk, Vitapet and Animates.

The company estimates the Australasian pet sector is worth about $14 billion and is growing at 2% or 3% a year. — BusinessDesk