Chemist Warehouse contract helps drive Ebos profit up 22 per cent

Inside Chemist Warehouse's first New Zealand store. A contract with Ebos will add about $1 billion to annual sales to the NZX-listed company

Ebos lifted first-half net profit almost 22 per cent as the impact of winning the Chemist Warehouse Group contract kicked in from July 1.

The trans-Tasman pharmaceuticals distributor and animal health products company said net profit for the six months ended December rose to $81.7 million from $67 million in the same six months of 2018.

Sales jumped 25.2 per cent to $4.4 billion – the Chemist Warehouse contract will add about $1 billion to annual sales.

Ebos said underlying earnings before interest, tax, depreciation and amortisation rose 13.4 per cent to $149 million. Actual ebitda was up 36.4 per cent to $167.2 million, boosted by a change in accounting standards for leases, while the underlying result included $1.2 million of transaction costs – Ebos bought the LMT and National Surgical businesses in October for A$34 million.

"Our strong results are reflective of the commencement of the Chemist Warehouse Group pharmaceutical wholesale contract together with strong performances from our institutional healthcare, contract logistics and TerryWhite Chemmart Group businesses, reflecting the strength of the Ebos business model," chief executive John Cullity said in a statement.

"Our extensive and diverse portfolio has again delivered a significant increase in both revenue and earnings," Cullity said.

Trading in the first half had been in line with the company's expectations and "we reconfirm the group is confident of a significant increase in earnings in the current financial year," he said.

Ebos hasn't seen any significant impact from the coronavirus crisis but is monitoring the issue closely.

Ebos will pay a first-half dividend of 37.5 cents per share on April 3 to those on the register on March 13. That is 8.7 per cent more than the previous first-half dividend. Shareholders can opt to participate in the dividend reinvestment plan with new shares issued at a 2.5 percent discount to the volume-weighted average share price.

Ebos shares closed at $23.35 and have gained 23.4 per cent in the past 12 months.