Sigma posts $284m turnaround

Sigma Pharmaceuticals reported a $284 million profit turnaround today, cheering investors who pushed the share price up 3.25% immediately after the announcement.

The Australian pharmacy wholesaler and retailer posted a $49.17 million profit for the 2011 calendar year, after a $235.4 million loss in 2010.

Blame for the loss was directed at US pharma giant Pfizer, the world’s biggest manufacturer of medical products, deciding to bypass Sigma’s distribution system by selling directly to Australian independent pharmacies.

The profit in 2011 came despite a 2.1% reduction in revenue to $2.854 billion.

“Although major Pharmaceutical Benefit Scheme reforms are expected to dampen sales, we will continue to respond through cost reduction measures and the renegotiation of customer terms to negate the impact on Sigma’s business,” chief executive and managing director Mark Hooper says.

The company will pay a final dividend of two cents, taking the total dividend for the year to 3.5 cents. Shareholders will also receive a special dividend of 1.5 cents – all fully franked.

“Ongoing improvement in return on investment capital is expected to continue into FY13 which also provides the opportunity for sustained, strong cash flow and further shareholder returns,” Hooper said.

Sigma distributes to independent pharmacies and owns some of the largest pharmacy retail brands in Australia, including Amcal, Amcal Max and Guardian. It was founded by two Melbourne pharmacists 100 years ago.