The Sigma Healthcare Ltd (ASX: SIG) share price has jumped 5.36% higher on Monday afternoon after the company provided a market update, announcing that it has found room for over $100m per annum in cost savings.
The announcement follows the completion of a four-month business review which has identified cost efficiencies of over $100m per annum to be realised over the next 18–24 months.
The company also confirmed its FY19 underlying EBIT guidance in the vicinity of $75m, while stating that it expects FY20 underlying EBITDA in the range of $55 – $60 million.
Contingent on the successful implementation of its cost reduction program, the company has signalled underlying EBITDA growth for FY21–FY23 in excess of 10% per annum.
Sigma Healthcare Ltd manufactures and distributes pharmaceutical products, operating through the Amcal, Guardian, PharmaSave, Chemist King, and Discount Drug Stores retail brands.
In December 2018, Australian Pharmaceutical Industries Ltd (ASX: API) announced that it had picked up a 12.95% stake in the company and approached the Sigma Board with a merger proposal. API and Sigma have since been conducting reciprocal due diligence.
Sigma Chairman, Brian Jamieson said: "We are open to continuing discussions on identifying potential merger opportunities, but this needs to be assessed in the context of what is in the best interests of Sigma shareholders."
"Importantly, independent of API's proposal, we have a clear vision of where we are heading as a standalone business and are committed to implementing the transformational program to capture the benefits for our shareholders."
With a market capitalisation of around $625 million, the Sigma share price currently trades on a P/E ratio of 11.3.
