Sigma Healthcare announced full-year results

Australia’s Pharmacy wholesaler, Sigma Healthcare Limited (ASX: SIG) has announced its full-year results for the year ended 31st January 2019.

The company marked a decline in sales revenue and reported the underlying sales revenue of $3976.8 million for the FY2019, down by 2.9% as compared to the revenue of $4,094.4 million in the previous corresponding period FY2018. The Gross profit of the company marked a decline by 3.9 % and reported at $273.2 million in FY2019 as compared $284.4 million in FY2018. However, other revenues of the company surged by 19.1% and reported at $99.5 million in FY2019 as compared to previously reported $83.5 in FY2018. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

The reported operating cost for the FY2019 was at $296.2 million and the underlying operating cost was reported at $282.2 million, up by 5.2% as compared to previously reported $268.1 million.

The EBITDA of the company declined by 9.2% and marked at $90.5 million in FY2019 as compared to $99.8 million in FY2018. However, the reported EBITDA of the company was at $76.5 million.

The reported EBITDA margin was at 1.93% for FY2019, and the underlying EBITDA margin was at 2.28% for FY2019, down as compared to the previously reported EBITDA margin of 2.44% in FY2018.

The reported EBIT was at $63.0 million for FY2019, and underlying EBIT was at $76.2 million in FY2019, down by 15.6% as compared to the previously reported EBIT of $90.3 million in FY2018.

The company marked a decline in EBIT margin as well, the reported EBIT margin for FY2019 was at 1.58%, and the underlying EBIT margin was at 1.91%, down as compared to the previously reported 2.20% in FY2018.

Sigma’s reported net financial expense was at $11.1 million for FY2019, and the underlying financial expenses of FY2019 was the same as reported net financial expenses. The net financial expenses marked a rise by 120.9% and reported at $5.0 million for FY2018.

The NPAT of the company declined by 22.7%, and the reported NPAT was $37.0 million for FY2019 and the underlying NPAT wad $46.3 million for FY2019, which marked a decline as compared to the previously reported NPAT of $59.9 million in FY2018.

The company distributed a total of 3.5 cents fully franked dividend for the year, which denoted a payout ratio of 80% of the underlying NPAT and 102% of the reported NPAT.

Financial Strength:

The net asset of the company is at $514.3 million for FY2019, which marks a continuous decline from FY2015, with the net asset in FY2015 of $573.1 million. The capital employed increased to $624.8 million in FY2019 as compared to $542.8 million in FY2018. The increase in capital employed was attributed to an increase in interest-bearing liabilities, which surged from $195.8 million to $315.8 million.

As a result of increased capital employed, the underlying ROIC declined from 16.6% in FY2018 to 12.2% in FY2019.

The company previously provide an update on API proposal.

Future Ahead:

Sigma has made progress on the Project Pivot transformation program and is confident on delivering more than $100 million efficiency gains over the next two years. As per the company, the MC/CW exit will impact the results in 2H20, which will be partly offset by the commencement of the cost saving from the Project Pivot. The investment program of the company is well advanced, and the increased capital expenditure is expected to return to normalcy by FY22.

The company said that it will have a strong balance sheet with debt circa $100 million by the end of FY20 with capacity and appetite for growth and expecting to maintain the high dividend pay-out ratio. Sigma confirmed the EBITDA guidance for FY20 to be in a range of $55 –$60 million and said that by FY23, the EBITDA of the company will return to the level of FY19.

The stock of the company plunged on ASX, trading 3.67% down at $0.525 (as at 3:02 PM AEST, 22 March).


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