Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Group revenue increased by 11.1% to ZAR36.3 billion, showcasing strong financial growth.
- Profit before tax grew by 22% in the second half, driven by effective cost control and operational leverage.
- Retail revenue increased by 9.7%, supported by new store openings and a strong like-for-like sales growth of 6.9%.
- Wholesale revenue rose by 13.3% to ZAR27.4 billion, with a significant contribution from internalized sales.
- The company maintained a strong market position with a 24.6% pharmacy market share and growth in key categories like health and medical.
Negative Points
- The group's performance was impacted by the absence of a ZAR72 million property gain from the previous year.
- COVID-19 vaccine and testing services revenue of ZAR143 million from the prior period was not repeated, affecting overall revenue.
- Finance costs increased due to higher interest rates and property acquisition loans.
- Operating margin declined from 5.1% to 4.9%, reflecting increased costs and margin compression.
- Occupancy costs rose by 21% due to higher municipal charges and short-term leases.
Q & A Highlights
Q: Can you elaborate on the strategic objectives and how they have been supported in the past year?
A: Rui Morais, CEO, explained that strategic objectives have been supported through operational leverage and cost control, leading to a 22% growth in profit before tax in the second half of the year. This was achieved by managing costs effectively and increasing revenue growth, resulting in a 4% increase in earnings per share, excluding non-trade property gains.
Q: How has the retail revenue performed, and what factors contributed to its growth?
A: Retail revenue increased by 9.7%, reaching nearly ZAR32 billion, driven by the maturity of existing stores and new space additions. Like-for-like retail sales grew by 6.9%, with a significant portion attributed to price inflation and a 1.5% volume growth.
Q: What are the key highlights of the wholesale revenue performance?
A: Wholesale revenue grew by 13.3% to ZAR27.4 billion, with a 21.4% increase in external revenue, driven by the TLC franchise offering and support from independent pharmacies. This growth reflects the strong performance of the wholesale segment in supporting retail stores.
Q: How has the company managed its cost control, particularly in the retail segment?
A: Julia Pope, CFO, highlighted that employee costs, the largest expense in the retail segment, were well controlled in the second half of the year through the implementation of a retail framework. This resulted in a 6.4% increase in employment costs in the second half, compared to 9.7% in the first half.
Q: What is the outlook for Dis-Chem Pharmacies in terms of property expansion and strategic growth?
A: Rui Morais, CEO, stated that the company plans to deploy approximately 137,000 square meters of retail space over the next 36 months, with a focus on maintaining and expanding market share. The strategy includes a proactive and analytical approach to identifying new space opportunities, with an accelerated rollout expected in FY26 and FY27.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
