Sigma Healthcare Ltd (ASX: SIG) shares are having a strong start to the day.
In morning trade, the Chemist Warehouse owner's shares are up 7% to $3.20.
This follows the release of another strong half-year result from the retail pharmacy franchisor and pharmaceutical wholesaler and distributor.
Image source: Getty Images
Sigma shares jump on results day
For the six months ended 31 December, Sigma delivered strong financial performance, continued expansion of the Chemist Warehouse (CW) branded network in both domestic and international markets, and solid progress on its integration and synergy delivery.
The company posted a 14.9% increase in revenue to $5.5 billion, with CW branded store sales in Australia growing 17.2% to reach $5.1 billion. Management notes that it benefitted from an expanding network and strong customer engagement.
Like-for-like sales across the CW branded store network were up 15%, which management believes demonstrates a pharmacy model and value proposition that continues to resonate with customers.
In addition, it notes that total sales also benefited from the structural uplift from the sale of GLP-1 class of medicines like Ozempic and Mounjaro and the strategic decision to distribute online orders directly from stores.
Thanks to a combination of operating leverage, synergy benefits, and product mix, Sigma recorded a 34 basis points increase in its normalised EBIT margin.
This ultimately led to the company posting a 19.2% increase in normalised net profit after tax to $392 million.
In light of this, a 2 cents per share fully franked interim dividend was declared.
Management commentary
The company's CEO and managing director, Vikesh Ramsunder, was pleased with the half. He said:
Our first half performance reinforces the strength of Sigma. As an integrated healthcare business we see long-term opportunities for growth, headlined by sustained performance across our core domestic market, led by CW branded stores. This has continued to be a consistent feature of the CW business over the past two decades.
CW branded store sales in Australia grew 17.2% for the half to reach $5.1 billion, benefiting from an expanding network and strong customer engagement. LFL sales across the CW branded store network were up 15.0%, demonstrating a pharmacy model and value proposition that continues to resonate with customers. Total sales also benefited from the structural uplift delivered from the sale of GLP-1 class of medicines and the strategic decision to distribute online orders directly from stores.
Outlook
Sigma has started the second half positively. It revealed that year to date trading, including the first seven weeks of the second half, has seen growth momentum continue.
During this period, Australian CW branded store sales are up 16.6% and like for like sales are up 14.4%. Growth in its international retail network continues.
