The Australian Pharmaceutical Industries Ltd (ASX: API) share price is dropping today following the release of its half year results.
At the time of writing, the pharmacy chain operator and distributor's shares are down 5% to $1.28.
How did Australian Pharmaceutical Industries perform in the first half?
For the six months ended 31 March, the Priceline pharmacy owner reported a 2.6% decline in total revenue to $2 billion.
Things were much worse for its earnings, with underlying earnings before interest and tax (EBIT) falling 26.5% on the prior corresponding period to $32 million.
And on the bottom line it was a similar story, with underlying net profit after tax falling 30.3% to $17.7 million.
This led to the company declaring an interim dividend of 1.5 cents per share, which is down sharply on FY 2019's interim dividend of 3.8 cents per share. Australian Pharmaceutical Industries didin't pay a dividend in the first half of FY 2020 due to COVID-19.
What were the drivers of this result?
The main drag on its performance was its Retail business, which reported a 10.7% decline in revenue to $526 million and an 8% reduction in gross profit to $103 million.
The company's Pharmacy Distribution performed better. It reported steady revenue at $1.46 billion and a small increase in gross profit to $114 million.
Outlook
No guidance was given for the full year. However, management commented that it remains confident about the growth potential of its two retail businesses and the reliability of its Pharmacy Distribution cash-generating business.
The company's CEO and Managing Director, Richard Vincent, said: "We've taken the necessary measures to ensure we have the balance sheet to grasp all the growth opportunities that we've identified for our existing businesses and to make any additional moves that we deem will increase shareholder value. Our suburban retail businesses have rebounded strongly since COVID restrictions have eased and our negotiations with CBD landlords to achieve acceptable rental outcomes are ongoing."
"We've made significant digital investments in the last year to prepare Priceline Pharmacy for growth, including in online shopping, instore health technologies, re-engineering our market leading loyalty program and securing new and exclusive product offerings and there will be further investments in this space over the next twelve months. Our strong track record in effectively managing flu vaccinations means we are better placed than most to quickly roll out COVID vaccinations. We're incredibly conscious of the responsibility we have to get the rollout right to reduce the risk of COVID breakouts in our community," he added.
