AUSTRALIAN Pharmaceutical Industries has refined tactical sales activity and continues to develop exclusive products and range extensions, as part of a strategy to combat weak consumer demand which saw the company report a 24.9% decline in H1 net profit to $24.9 million (PD breaking news).
CEO Richard Vincent said that as of 28 Feb the company had 466 Priceline Pharmacy stores, with a "robust pipeline" of potential partners - but network growth has slowed slightly "as we move to address unrealistic rental demands for ourselves and franchise partners," pledging progress in the coming months in pushing back on landlords who do not reflect the current retail environment reality.
Vincent said the half yearly result was slightly ahead of the outlook provided earlier in the year (PD 22 Jan), noting that the Pharmacy Distribution business performed strongly with underlying growth of 9.8% - masked by lower demand for high cost Hepatitis C medicines.
The company said the decision by AstraZeneca to deliver selected products via a non-CSO wholesaler had a "minor impact" in the period.
Suppressed consumer demand led to a small drop in like-for-like Priceline store sales, but Vincent said the brand had held its health and beauty market share steady.
He said the Priceline Pharmacy network was expected to grow and generate efficiencies due to major capital investments in recent years.
"We anticipate that current consumer sentiment will remain, but we have a strong customer offering backed with a sales-focussed marketing program and remain confident in our retail store pipeline," Vincent said.
The API Board declared 3.5c per share dividend, with Vincent saying the company currently expects its full year result to be marginally higher than FY17 "assuming the current trading conditions do not deteriorate further".
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