Dis-Chem Pharmacies reports strong annual earnings growth, but share price falls on the JSE
Image: Karen Sandison, Independent Newspapers
Dis-chem Pharmacies' share price slumped 5.5% on Friday despite reporting good annual earnings growth and solid revenue growth for the first quarter to May 27.
Group revenue grew by 8.6% for the three months of the new financial year compared with the same time last year, while retail revenue was up 7.8%, supported by the opening of 9 pharmacy stores, with comparable pharmacy store revenue growth at 4.6%, the group said in a statement Friday. It plans to open a further 39 stores this year.
Revenue increased 8% to R39.2 billion in the 12 months to February 29, 2025, while headline earnings a share (HEPS) was up 20% to 137.5 cents. The final dividend was raised 23.8% to 27.85 cents, bringing the payout for the year 19.9% higher to 54.83 cents.
Dis-Chem's share price traded at R33.91 on Friday, barely changed from R31.28 a year ago. In contrast, for comparison, competitor Clicks Group's share price at R389.62 was 32% higher over 12 months.
Dis-Chem directors said they continue to make 'solid progress' on the eight strategic areas aimed at delivering sustainable shareholder value. They said the biggest contributor to earnings growth in the year was better cost management, particularly payroll cost.
Excluding a once-off property gain associated with the acquisition of the Midrand warehouse, HEPS increased 12.3% to 128.7 cents a share.
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Retail revenue grew by 5.9% to R33.6bn, with comparable pharmacy store revenue growth at 4.1%.
Net store changes in the past year included opening 20 and closing 3 retail pharmacy stores, and the closure of a net nine baby stores, resulting in a footprint of 285 retail pharmacy stores and 45 retail baby stores.
Wholesale revenue grew 9.9% to R30.1bn. Wholesale revenue to own retail stores, the biggest contributor, grew 7.4% while external revenue to independent pharmacies and The Local Choice (TLC) franchises grew by 22.1%.
Independent pharmacy growth was 22.7% attributable to both new customers and increased support from the current base.
A R650m loan taken out in the year was used to acquire the Midrand warehouse property, while a R502m facility taken out in the prior period funded the acquisition of the Longmeadow warehouse property.
Wholesale expenses grew 11.1%, mainly due to the acquisition of the Longmeadow warehouse in the prior period. Excluding the additional costs incurred for the Longmeadow warehouse, wholesale expenses grew by 9%.
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