Chemist Warehouse merger target Sigma reports 149% FY24 profit jump

This could be the last set of results from Sigma as we know it if its merger is approved.

| More on:
a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The market may be charging higher today, but the same cannot be said for the Sigma Healthcare Ltd (ASX: SIG) share price.

The shares of the pharmacy chain distributor and operator, which is planning to merge with Chemist Warehouse, are down slightly to 1.5% to $1.20.

This follows the release of the company's full-year results this morning.

Sigma share price falls on results

  • Net revenue down 9.2% to $3.3 billion
  • EBITDA up 3.9% to $51.5 million
  • Net profit after tax up 149% to $4.5 million
  • Partially franked final dividend of 0.5 cents per share.

What happened in FY 2024?

For the 12 months ended 31 December, Sigma posted a 9.2% decline in net revenue to $3.3 billion. This reflects its decision to dispose of its hospital distribution business during the year and elevated sales of Rapid Antigen Tests in FY 2023 that have not repeated.

Nevertheless, the company's EBIT came in 20.4% higher year on year at $23.2 million, with reported net profit after tax increasing 149% to $4.5 million. This includes initial costs of $8.2 million relating to its proposed merger with Chemist Warehouse.

Excluding merger transaction costs, EBIT was $31.4 million and net profit after tax was $12.7 million for the year.

Management advised that it was able to deliver strong earnings growth despite its revenue decline thanks to efficiencies. Sigma's CEO and Managing Director, Vikesh Ramsunder, said:

With our operating performance strong, we have been able to drive efficiencies across our business, reducing total operating costs by 10.7% after absorbing merger proposal costs, providing a catalyst for our current and future financial performance. The company-wide simplification program and divestment of non-core assets has delivered a leaner operating model.


The company has re-affirmed its medium-term EBIT target of 1.5% to 2.5% on a standalone basis.

This compares to its EBIT margin (before Chemist Warehouse merger costs) of 0.95% for FY 2024.

Chemist Warehouse merger update

Ramsunder spoke briefly about the proposed merger with Chemist Warehouse, once again reiterating the benefits of the move. He said:

This merger proposal is truly transformational for Sigma. It will diversify our earnings and growth profile whilst also creating opportunities for Sigma to enhance the support provided to pharmacy owners, helping them to profitably grow their business and better support their communities.

Sigma submitted its submission to the ACCC in February, and on 8 March the competition regulator commenced a public consultation process. Mr Ramsunder is hopeful that a decision on the merger could be made in the second half of 2024. He adds:

This is a significant and complex transaction which will require a detailed review by the regulator. There will be community interest and a wide consultation process which adds to the complexity of predicting timeframes. We are hopeful of a decision from the ACCC in the second half of the calendar year, which will precede a number of other steps required to reach completion.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Delighted adult man, working on a company slogan, on his laptop.
Earnings Results

Bank of Queensland share price leaps 6% on improving outlook

ASX 200 investors are bidding up the Bank of Queensland share price on Wednesday.

Read more »

Photo of two women shopping.
Earnings Results

Premier Investments share price jumps 9% on results and demerger plans

The Smiggle and Peter Alexander owner has released its results. How did it perform?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Earnings Results

Soul Patts share price struggles on falling profits

ASX 200 investment house Soul Patts reported its half year results this morning.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Earnings Results

Brickworks share price tumbles on disappointing half-year loss

This loss didn't stop the company from increasing its dividend again.

Read more »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Earnings Results

ASX All Ords stock KMD tumbles as interim dividend cancelled

Investors are hitting the sell button on ASX All Ords stock KMD today.

Read more »

Coal miner holding a giant coal rock in his hand making a circle with his hand, symbolising a rising share price.
Energy Shares

New Hope share price charges higher despite profit crunch and huge dividend cut

Weaker coal prices have hit this miner's profits and dividend hard.

Read more »

A Chinese investor sits in front of his laptop looking pensive and concerned about pandemic lockdowns which may impact ASX 200 iron ore share prices
Earnings Results

Liontown share price tumbles 7% on half-year results

This lithium developer's results have been released this afternoon.

Read more »

A man in a hard hat and high visibility vest holds his thumb up in a gesture of confidence with heavy moving equipment in the background as on a mine site as the Chalice Mining share price rises today.
Earnings Results

Sayona Mining share price jumps despite $32m half-year loss

The Sayona Mining Ltd (ASX: SYA) share price is pushing higher on Thursday. At the time of writing, the lithium…

Read more »