The Australian Pharmaceutical Industries (ASX: API) share price has fallen 8% in response to the company’s FY20 half year result.
What is Australian Pharmaceutical Industries?
API is the pharmacy company behind Priceline, ClearSkincare, Soul Pattinson Chemist and much more. The Melbourne-based company is more than 100 years old and operates more than 500 chemists and hundreds more are included in its member network.
What did API report?
API said that its result was in line with expectations, though maybe not that expected by the market with the share price down fairly heavily.
Total revenue was up 2.8% to $2 billion. However, the underlying EBIT (learn what EBIT is here) fell by 6.1% to $41.7 million and the reported EBIT fell 11.5% to $39.3 million respectively.
Underlying net profit after tax (NPAT) fell 1.9%, excluding the new lease accounting rules, to $26.3 million. Reported net profit was down 9.9% to $22.5 million.
API Dividend
API said it was going to focus on cash management and assets positioned to succeed through this COVID-19 pandemic.
For that reason, the API board has decided not to pay an interim dividend. The board thinks it’s prudent to preserve cash in the current environment.
However, it has managed to improve its balance sheet with adjusted net down down 50.5% to $129.7 million and cash conversion days of 22, a reduction of 7.3 days.
API Outlook
API CEO and Managing Director Richard Vincent said: “The result is in line with expectations provided at our January AGM…API’s strengthened balance sheet will give it flexibility in managing the business and investing for growth. From a capital management perspective, our focus will be on preserving cash in the short term.”
API couldn’t give formal guidance due to the uncertainty the pandemic is causing. The company is currently looking for a new, highly automated distribution centre in Sydney, but the majority of the $50 million spend would be in FY22.
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.