COSTS associated with the proposed merger between Sigma Healthcare Limited and Chemist Warehouse Group (CWG) have been cited for a 66.9% profit spiral in the company's half-year results.
In presentations to the Australian Securities Exchange tabled this morning, the company reported a net profit of $3.7 million, down from $11.2 million one year earlier.
Profits were also impacted by $2 million in upfront costs associated with preparation in the Chemist Warehouse supply chain contract.
The company defended the result by pointing towards a strong pipeline of growth in a "competitive but defensive market segment", with revenues from its new CWG supply agreement trickling through from its 01 Jul 2024 start date.
"The company has the existing infrastructure to efficiently absorb volume growth while retaining capacity for future expansion without major capital expenditure requirements," Sigma said.
The Chemist Warehouse supply contract is expected to yield $3 billion in annualised revenue over the five-year term, of which two-thirds is new revenue for the group.
Elsewhere, Sigma said like-for-like sales in its Amcal and Discount Drug Store brands were up 13% on the back of a new retail strategy. ML
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