SIGMA Healthcare has reiterated to shareholders its $75 million underlying profit guidance for 2018/19, signifying the company's "robust business" with an estimated greater than $100 million in cost savings through a proposed restructure (PD breaking news).
The ASX announcement came after the release of the results of a wide-ranging review of the business, undertaken by consulting firm Accenture following last year's decision not to renew Sigma's supply contract with Chemist Warehouse.
The four-month project has identified cost efficiencies worth more than $100 million per annum, which CEO Mark Hooper said would be progressively delivered over the next 18-24 months.
The company said it now expects to deliver underlying earnings of $55m-$60m in 2019/20.
The "far-reaching and structured review" will see profits return to current levels by 2023, while "Sigma will be a more robust business that is fit for purpose," including having significantly lower debt levels, Hooper said.
Sigma is in the process of reciprocal due diligence with Australian Pharmaceutical Industries (API), which proposed a merger in Dec 2018 after acquiring a substantial shareholding.
The release of the report indicates Sigma's determination to highlight the value in its existing business and the benefits this would bring to any suitor, including API.
Sigma Chairman, Brian Jamieson, said "We are open to continuing discussions on identifying potential merger opportunities, but this needs to be assessed in the context of what is in the best interest of Sigma shareholders.
"Importantly, independent of API's proposal, we have a clear vision of where we are heading as a standalone business and are committed to implementing the transformation program to capture the benefits for our shareholders".
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