The Sigma Healthcare Ltd (ASX: SIG) share price is up 6% after providing a trading update for Chemist Warehouse.
Sigma is one of largest pharmaceutical distributors in Australia and it also has Amcal and Discount Drug Stores. It’s on track to merge with Chemist Warehouse.
Chemist Warehouse FY25 trading update
Sigma Healthcare reported that Australian Chemist Warehouse retail network sales grew 12.3% year on year to $4.5 billion and international retail network sales increased 18.4% to $648 million.
Therefore, total Chemist Warehouse retail network sales increased 13% to $5.15 billion.
These numbers were driven by like for like network sales growth of 10.4% in Australia and 9% in the international segment.
At the end of HY25, it had 658 Chemist Warehouse stores, up from 622 at the end of HY24. It is now in five geographies, up from four, with two new stores opening in Dubai.
Profitability measures
Chemist Warehouse reported an impressive array of profit measures.
It said that its HY25 EBIT jumped 35% to $437.9 million after a 400 basis point (4.00%) increase of the EBIT margin to 22.3%, up from 18.3% in HY24.
The Chemist Warehouse profit before tax (PBT) grew by 36.1% to $436.8 million, which also suggests the PBT margin improved significantly.
Management comments
The Chemist Warehouse CEO Mario Verrocchi said:
CWG has delivered a record result for 1H FY25 with double digit like-for-like retail network sales growth, aided by a strong trading performance in December. We have executed well on the commitments we made in September to deliver sustained growth through new franchise store openings and international expansion while implementing new supply agreements to drive efficiencies. EBIT increased by 35% and margins expanded by 400 basis points.
We opened 19 new stores in the half with two new stores opening in Dubai, a new geography with attractive opportunities. We made good progress in transitioning wholesale supply to Sigma to drive efficiency gains and launched Wagner Pharma. We also successfully launched the new Messi men’s fragrance which delivered strong sales during the period, demonstrating our ability to innovate and support partners’ brands.
Final thoughts on the Sigma Healthcare share price
Sigma is a now a very interesting business with the impending merger. I think the combined business has very appealing growth prospects both locally and internationally. I’m thinking about adding its Sigma/Chemist Warehouse shares to my portfolio, though the valuation is hard to judge before the merger has occurred. Even so, it’s clear the business has big growth plans.
