Is Australian Pharmaceutical Industries Ltd (ASX: API) a good dividend share after announcing its half year result?

API Pharmaceutical is the pharmacy company behind Priceline, ClearSkincare, Soul Pattinson Chemist and much more. The Melbourne-based company is more than 100 years old and operates more than 500 chemists and hundreds more are included in its member network.

Here’s What API Reported In Its HY19 Report

API revealed to investors that total revenue growth was 6.6% compared to the HY18 result, excluding the Hepatitis C medicine sales and PBS Reforms.

Priceline Pharmacy’s total network sales were $1.1 billion, which was up slightly and total network like for like sales were up 0.3%. The Priceline store network currently sits at 479 stores, but it will persist with the policy of closing stores where landlords have unrealistic rental demands.

The EBIT (click here to learn what EBIT means) grew by 5.8% to $44.4 million, which was ahead of guidance of 5%. The underlying EBITDA grew by 3% to $60.5 million (click here to learn what EBITDA means).

Net profit after tax (NPAT) was 0.2% higher at 0.2%, which includes the impact of financing costs associated with the Sigma Healthcare Ltd (ASX: SIG) share purchase.

However, the underlying net profit was in line with the prior year’s result at $26.8 million. The underlying return on equity (ROE) grew 1.01% to 10.23%.

API Management Comments

API CEO And Managing Director Richard Vincent said: “API’s financial position remains strong and has allowed us to make an investment in Sigma Healthcare, acquire Clear Skincare and provide additional inventory to capitalise on sales opportunities during the half.

We have a highly complementary portfolio of assets with an attractive growth outlook, which combined during the half to deliver improved earnings and NPAT.”

API Outlook And Dividend

The retail trading for API has been “variable”, but the company expects to deliver positive growth again in the second half of the year.

The API Board declared a fully franked interim dividend of 3.75 cents per share, which was an increase of 7.1%, which represents a payout ratio of 77% of the half.

It currently has a fully franked dividend yield of 5.3%, so it has an attractive dividend yield and might be a decent idea for income. However, it is delivering little growth at the moment, so one of the shares revealed in the free report below could be better picks.


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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.