Sigma half-year profit drops 80pc after Chemist Warehouse loss

Sigma wears a hit from the loss of Chemist Warehouse business and staff reductions.

Sigma Pharmaceuticals CEO Mark Hooper Picture: David Geraghty

Sigma Healthcare says its transformation program is on track at the half year, but its bottom line took a significant hit after the loss of a key contract with Chemist Warehouse last year.

Pharmaceutical supplier Sigma posted an 80 per cent profit drop for the half to July 31, to $2.52 million, from $13.4 million in the same period last year.

Sigma said net expenses of $12.4 million after tax had been a blow to the company following restructuring, litigation and due diligence largely in relation to redundancies after it cut staff in the aftermath of the loss of the Chemist Warehouse business and closure of its Belmont distribution centre in WA.

Sales revenue for the period was down by 4 per cent, influenced by a reduction in demand for high cost, low margin, hepatitis C medications and reduced prices from ongoing Pharmaceutical Benefits Scheme price reform.

“Progress in executing Project Pivot means Sigma remains on track to achieve the $100+ million efficiency gains. A slight timing delay is likely to see Underlying EBITDA for FY20 at the low end of the $55m to $60m previous guidance, with FY21 remaining in line with previous expectations with growth of at least 10pc,” chief Mark Hooper told the market.

Since the end of the period, directors declared an interim dividend of 1 cent per share, not included in its balance sheet to July 31.

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