Chemist Warehouse owner Sigma Healthcare Ltd (ASX: SIG) has had a strong start to the new financial year, and says savings from the mega-merger, which created the company, are tracking better than expected.
Sigma managing director Vikesh Ramsunder told shareholders at the company's annual general meeting on Wednesday that the strong momentum from FY25 had continued on into the first quarter of this financial year.
Total Chemist Warehouse sales were up 17.9%, while like-for-like sales were 14.7% higher for the quarter, he said.
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Ozempic tailwinds
And the take-up of GLP1 drugs – weight loss drugs such as Ozempic – was also benefiting the company.
Mr Ramsunder said on the matter:
First quarter FY26 sales reflect a strong performance across key product categories and a stronger contribution from GLP1 sales. I do call out that in FY25, GLP1 sales did not start to gather meaningful momentum until the second quarter. This has led to the elevated sales growth in the first quarter of FY26.
Mr Ramsunder said the company had a positive long-term outlook, "and our execution priorities are clear".
We will continue to roll out new stores domestically and internationally with an objective to achieve network growth in line with historical patterns. We are opening new network stores in under-penetrated local and offshore markets, while revitalising Amcal and DDS (Discount Drug Stores).
The company was also continuing to roll out new exclusive and own-brand products to support its margins and differentiation, he said.
Synergies better than expected
Sigma and Chemist Warehouse merged in February this year, and Mr Ramsunder said now, with several months of operations under their belt, it was clear that cost savings would be better than expected.
We have … completed a deep dive to validate our integration opportunities. This resulted in us upgrading the expected synergy benefits of the merger from $60 million to $100 million by year four.
Mr Ramsunder said the savings would be weighted towards the end of this period, but would be delivered incrementally to further support earnings margins.
During the past financial year, the company opened 35 new Chemist Warehouse stores, launched the Wagner generic medicines range, and its distribution centres delivered 29% more product while costs per unit reduced by 11%, Mr Ramsunder said.
Sigma shares traded as high as $3.14 on Wednesday morning, up 3.3%, before settling back to be 1% higher at $3.07.
The company was valued at $35.1 billion at the close of trade on Tuesday.
