Strong Priceline sales drive API growth

Strong sales at Priceline stores have lifted owner Australian Pharmaceutical Industries’ half year profit by 7.

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7 per cent to $22.9 million.

The company’s revenue in the six months to February 29 rose 4.4 per cent to $1.79 billion, while earnings before interest and tax rose more than 15 per cent.

API, the parent company of the Priceline, Soul Pattinson and Pharmacist Advice chains, attributed the gains to growth in the Priceline business, including increased demand for new franchises.

The company also declared an improved operating cost performance over the half year, delivering a decline in overall operating costs as a percentage of revenue.

It was the fourth consecutive reporting period in which they did so.

“The continued focus on cost control has helped deliver another pleasing result, with cost as a percentage of revenue falling 16 basis points,” chief financial officer Peter Mendo said.

API paid an interim dividend of 2.5 cents per share, fully franked, up 25 per cent on the previous half year.

“There are currently sufficient franking credits to maintain fully franked dividends into the forseeable future,” Mr Mendo said.

Chief executive Stephen Roche said he was very pleased with the results, which “reflect a business in a strong phase of growth” despite a competitive market.

Mr Roche said the average API customer considered his company’s stores a “playground destination” due to its offerings in cosmetics, skin care, vitamins and medicine.

“She knows what we stand for. Essentially, our formula remains the same,” Mr Roche said.

“We have the great range she wants and provide the right service to match it.”

Mr Roche also said Priceline’s customer engagement strategy was delivering results.

Sales from the six million-strong “Sister Club” loyalty program constituted more than 40 per cent of total sales, he said.

API shares were up 0.5 cents, or 0.26 per cent, at $1.895 at 1408 AEST.

HEALTHY GROWTH FOR AUSTRALIAN PHARMACEUTICAL INDUSTRIES:

* Revenue up 4.4 per cent to $1.79 billion

* Net profit up 7.7 per cent to $22.9 million

* Dividend of 2.5 cents per share, fully franked, up from 2 cents in the previous half