Dis-Chem holds back on dispensing dividend

print

Dis-Chem holds back on dispensing dividend

Published Date: 2020-05-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

 Dis-Chem holds back on dispensing dividend

The group has deferred the declaration of a dividend to its next cycle when it has a better understanding of normalised trading conditions.

Dis-Chem has deferred payment of a final dividend due to current market uncertainty brought about by Covid-19 and as it works out how it will pay for its recent acquisition of Baby City. The discount pharmacy chain says trading patterns have also been volatile due to the pandemic, with an initial surge in sales prior to the lockdown reversing as the government restricted sales of essential products.

Last week, the group said it had bought the network of 33 baby specialist stores for R430 million in a deal that would complement its own offering to consumers. It will add that to its own store network, which grew to 170 last year as it opened 18 new stores and acquired three new pharmacies.

Dis-Chem said results for the year to end-February were affected by a strike early last year, other once off costs and new accounting methodology.

Group revenue rose 12% to R24 billion, supported by market share gains and the acquisition of Springbok Pharmacy and Western Cape wholesaler Quenets, while total income grew by 9.8% to R6.8 billion. Excluding unearned rebates of R81 million in the prior year, total income was 11.3% higher. While first-half earnings fell 37.4% due to a rationalisation of its inventory, they increased by 16.7% in the second six months as more normalised purchases took place. Excluding once-off items, earnings for the year fell 5.9%. Headline earnings per share declined by 16.7% to 69.6c after a restatement of the prior year's numbers due to the adoption of IFRS 16, the new accounting methodology which affects how leases are accounted for.

Dis-Chem said it had a strong balance sheet and in order to preserve cash resources it had deferred the declaration of a dividend to its next dividend cycle once it had a better understanding of normalised trading conditions. Revenue had started to recover since the shift to level 4 of the lockdown. For the 11 weeks to 16 May, retail revenue was 6.2% up on last year, with wholesale revenue growing by 25%.

Its shares fell 1.4% to R19.86 yesterday.





Similar Stories