De-stocking deals Sigma a blow

While the wholesaler reported a net profit of $30.7 million, up from $30.12 million in the previous corresponding first half, sales in the pharmaceuticals division of the company fell 10.4 per cent to $276.5 million after pharmacists reduced their stock holdings in the lead up to the 1 August price cuts.

"In the lead-up to the introduction of price cuts under reforms to the PBS, our retail pharmacy customers significantly reduced their inventory holdings. The de-stocking saw inventory levels in pharmacy reduced by approximately on month which impacted on first half sales across our key generics and wholesale sales channels," said Sigma's managing director, Elmo de Alwis.

"Pleasingly, there has been no loss of market share in both of these channels, and whilst competition remains fierce, particularly in generics, the business is well positioned to continue to enjoy revenue and EBIT growth."

Despite the impact of destocking, the healthcare division, which includes the Amcal and Guardian banners, posted a "pleasing" result with net sales revenue of $1,189.4 million, up 5.7 per cent from the prior corresponding period.

"A continued focus on customer service and generation of supply chain efficiencies has enabled Sigma to report a pleasing result for the division. The numbers of Amcal and Guardian stores remains stable, and combined, these two banners represent the ninth largest retail turnover group in Australia," he said.

Mr de Alwis also indicated the relaunch of the Herron brand was showing encouraging results so far.