The Australian Pharmaceutical Industries Limited (ASX:API) is involved in the operations of wholesale distribution of pharmaceutical, medical, health, beauty, and lifestyle products to pharmacies. On 18 October 2018, Australian Pharmaceutical released their full year results of FY 2018. At the end of the year, the balance sheet of the company is looking strong, and it is also providing flexibility for further capital management. After the release of this news, the share price of the company increased by 0.29 percent as on 18 October 2018 (1:30 PM AEST).
The company managed to achieve strong financial results in FY 2018 despite the ongoing PBS (Pharmaceutical Benefits Scheme) Reforms and price adjustments. The company reported underlying NPAT of $54.7 million in FY 2018 which was 0.9 percent higher than the previous year. The total revenue of the company slightly decreased by 0.9 percent to $4.0 billion, reflecting a decrease in the demand for Hepatitis C medicines of approximately $155 million. Due to the effect of an increased number of price reduction cycles in the PBS during FY 2018 and exclusive direct distribution arrangements, the Underlying EBITDA decreased by 1.5 percent to $118.7 million. The company reported net debt of $55.9 million in FY 2018, and excluding the acquisition of Clear skincare it would have been net cash of $5.8 million.
The overall Priceline Pharmacy performance also improved in FY 2018 as the total network sales increased by 2.1% to $2.11 billion with total network like-for-like sales down by 0.2 percent. The pharmacy distribution revenues of the company were slightly lower at $2.9bn in FY 2018. There was a significant improvement in the Consumer Brands business of the company as the revenues increased by 17 percent to $59.3 million in FY 2018 as compared to previous year. The EBIT of consumer brand business increased by $2.1 million to $2.8 million in FY 2018.
The board declared a final fully franked dividend of 4.0 cents per share for FY 2018, which is an increase of 14.3 percent compared to previous year, taking the full year fully franked dividends to 7.5 cents per share. These dividends are planned to be paid on 7 December 2018.
For FY 2019, the company is planning to introduce unique formulations in OTC (Over the Counter) health market. The company is also broadening its product range through agreements with reputable international partners. Moreover, the company is eying to develop opportunities in the Asian Market. For FY19, the capital expenditure of the company is expected to be consistent with FY 2018. The company will continue to review its option for the future investment in a Sydney DC. The payments for the Clear skincare acquisition are expected to be made in September 2020 and 2021. The company is also having sufficient franking credits for future dividend payments.
In the past six months the share price of the company increased by 13.16 percent as on 17 October 2018. API’s share traded at $1.725 with a market capitalization of $846.98 million as on 18 October 2018 (AEST 1:30 PM).
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