South African drugstore Dis-Chem advantages from medicine price tag hike

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JOHANNESBURG — South African drugstore chain Dis-Chem Pharmacies Ltd mentioned on Wednesday that its revenues rose 13.five% in the 5 months by means of July, thanks to an improve in medicine rates and a jump in wholesale revenues.

Dis-Chem, which competes with Clicks Group, mentioned income from March 1 to July 31 rose to 9.9 billion rand ($650 million).

Retail sales rose by 12% to 9 billion rand, with comparable sales development of five.three%, helped by a three.78% improve in medicine rates which came into impact in March.

The enterprise had been hit by prolonged strike action from November final year to March this year more than workers’ wage demands, which led it to miss earnings expectations for its complete fiscal year that ended in February.

On Wednesday it flagged a single-off fees such as a modify in the firm’s bonus policy, strike-associated fees and an unearned rebate, which will negatively influence the 1st-half earnings for the monetary year 2020.

Its shares, nonetheless, have been up three.three% at 21.43 rand immediately after Wednesday’s trading update as investors have been encouraged by the income development.

Dis-Chem has been investing in technological and revolutionary methods to drive dispensary volumes such as click-and-gather solutions and partnering with FNB bank, which permits shoppers to order prescription medicine by working with the FNB App.

As a outcome, it mentioned it saw marginally enhanced trading volumes driven by sturdy dispensary trade.

“We are pleased to see that the group delivered sturdy income functionality in a challenging financial atmosphere with enhanced competitors and a constrained customer,” Chief Executive Ivan Saltzman mentioned in a statement.

“I am incredibly happy with the rationalization of stock levels post the strike and SEP purchase-in, as we concentrate on enhancing cost-free money flow making certain we demand much less net functioning capital investment which will much better allow us to fund future development techniques.”

SEP refers to the Single Exit Price tag mechanism in South Africa that lists the maximum price tag that a medicine can be charged by dispensers.

To date, the enterprise has added nine new shops and is on track to add one more 13 shops prior to year-finish, it mentioned.

Wholesale income enhanced by 15.three% to six.eight billion rand, with sales to independent pharmacies and The Regional Option (TLC) franchisees up by 49% and 27.7% respectively, primarily due to the Western Cape wholesaler acquisition in November 2018 and a developing TLC buyer base.

“With national warehouse representation now enabling us to access the independent pharmacy markets in the Western Cape and KwaZulu-Natal, we will continue to concentrate on developing the TLC and independent buyer bases,” the firm mentioned. ($1 = 15.2369 rand) (Reporting by Nqobile Dludla Editing by Susan Fenton)

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