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Sigma half-year profit falls 81 per cent on restructure costs

Sigma Healthcare half-year profit tumbled 81.2 per cent to $2.52 million, due to reduced input from its expiring Chemist Warehouse supply deal, as well as one-off restructuring costs tied to the commencement of its transformation program.

The pharmaceutical retailer, which runs Amcal, Chemist King, Discount Drug Stores, Guardian pharmacies and PharmaSave, said on Thursday revenue fell 4.1 per cent to $1.88 billion in the first half of FY20, while EBITDA fell 19.8 per cent to $25.3 million.

Shares in the business had fallen more than 3 per cent on Friday morning to 58 cents per share. 

Sigma’s restructuring efforts have so far seen approximately 370 staff members removed, after closing its Shepparton, Newcastle and Launceston distribution centres.

“We are… very aware of the personal impact such a transformation can have on our people and customers,” Sigma chief executive Mark Hooper said in a note to investors. 

“We have implemented a number of communication and change management programs to support those who are unfortunately impacted, and to ensure focus and resilience to drive our business.”

According to Hooper, Sigma is entering a growth phase, though expects the ongoing progress of Project Pivot to see underlying EBITDA for FY20 hit the lower end of the previously stated guidance of $55 to $60 million.

FY21 will remain in line with previous expectations of 10 per cent growth, however. 

“Sigma’s fundamentals remain in strong shape as well continue to implement the changes to deliver sustainable benefits for our business medium to longer term,” Hooper said. 

“We have made good progress on our business transformation program, and we are on track to deliver the $100+ million efficiency gains in line with previous guidance.”

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