Pharmacy retailer Dis-Chem’s earnings grew by 44% for the half-year ended August 31, 2022, boosted by consumer shopping habits and routines, which were almost restored to pre-Covid levels.
This despite the group coming under fire following a leaked letter last month by its CEO Ivan Saltzman, in which he announced a moratorium on the hiring of white staff.
Saltzman failed to address the issue in the firm’s interim results webcast.
In its six months results released yesterday, the group said its headline earnings per share were 70.1 cents, a 44.3% hike from the prior comparable period.
Retail revenue grew by 9.3% to R14.4 billion with comparable pharmacy store revenue at 3.6%.
“If the contribution of Covid-19 vaccines and testing are excluded from both periods, retail revenue grew by 10.0%. The group’s wholesale revenue grew by 10.6% to R12.1bn in the corresponding period. Wholesale revenue to the group’s retail stores remains the biggest contributor and grew by 10.7%,” it said.
Dis-Chem declared an interim dividend of 28.1c per share based on 40% of headline earnings. This was an increase of 44.3% from the prior comparable period.
Saltzman said: “With consumer shopping habits and routines just about restored to pre-Covid levels, we have experienced a normalisation in our operating environment for the first time in over two years.
Dis-Chem’s entrenched everyday low-price strategy has never been more important in circumstances where consumers are continuing to experience significant financial hardship.
“Under such affordability constraints, our group is committed to driving down cost and increasing access to quality healthcare through the integration of capabilities along the healthcare value chain,“ he said.
Meanwhile, Rui Morais, the chief financial officer of Dis-Chem, said the group’s main focus was to position itself as South Africa’s primary healthcare authority.
Total income grew by 22.8% to R5.2bn, with the group’s total income margin rising to 31.7% from 28.2% in the prior comparative period.
“This means the group has met and exceeded its target of a 30% total income margin 18 months sooner than initially anticipated. This increase has resulted in improvements in both Ebitda (Earnings before interest, taxes, depreciation and amortisation) and operating margins,” it said.
During the six months, five Dis-Chem stores and three Baby City stores were opened.
“The group extended its baby retail leadership position by acquiring a net 15 Baby Boom stores effective March 1, 2022. These events resulted in a total of 251 retail pharmacy stores and 53 retail baby stores as of August 31, 2022,” Dis-Chem said.
In the second half of 2023, the group planned to open nine Dis-Chem stores and five Baby City stores.
External revenue to independent pharmacies and The Local Choice (TLC) franchises grew by 9.7%.
“When excluding wholesale revenue to Medicare stores in the prior period, internalised since October 1, 2021, external revenue grew by 20.4%, comprising independent pharmacy growth of 15.8% and TLC growth of 22.5%.
“The TLC growth is due to a combination of an increase in TLC franchise stores from 134 to 153 together with the increasing support of the group’s supply chain from existing TLC franchisees. Independent pharmacy growth is attributable to new customers and increased support from the current base,” it said.
Looking forward, Saltzman said the group’s relentless commitment to delivering high-quality products and service excellence would continue to promote customer support within the resilient markets in which the group operated.
“Aided by the rebranding of acquired Medicare stores, we are proud to have extended our position as South Africa’s largest retail pharmacy group by dispensary market share. Work has commenced on replicating our leading pharmacy market share in Gauteng across other provinces.
“In this regard, we continue to innovate to realise our vision of integrated primary healthcare, aimed at increasing access, reducing cost, and delivering better health outcomes for more South Africans,” Saltzman said.
In later afternoon trade, Dis-Chem’s share price was up 0.62% at R33.95.