South Africa’s leading pharmaceutical retailer reports over 30% jump in earnings

SOUTH AFRICA – South Africa’s Dis-Chem Pharmacies Ltd has reported a 35.3% jump in half-year earnings, helped by pent-up demand for medicines and vaccines after the easing of pandemic lockdowns.

Business confidence in South Africa has returned to pre-pandemic levels, as retailers see increased demand and footfall thanks to COVID-19 vaccination drives, easing restrictions and stimulus measures. Dis-Chem’s revenue surged 19.2% over the past two months.

Dis-Chem, which runs the second-largest chain of pharmacies in South Africa and competes with Clicks Group, said it had administered 405,000 COVID-19 vaccine doses during the half-year ended August, with that number increasing to 860,000 by the end of October.

However, a disproportionate rise in sales of lower-margin products related to COVID-19 during and after the second and third pandemic waves left transactional gross margin behind sales growth year-on-year, the company said.

The company’s headline earnings per share, a key metric of profit for South African companies, came in at 48.7 cents for the half-year ended August, the drug store chain said. Revenue rose 16.6% to 14.9 billion rand ($967.49 million).

The company is reporting these profits a while after the company’s founders an and Lyn Saltzman, announced reducing their majority shareholding in the pharmaceutical retailer.

They targeted to sell between R5.4 billion and R5.5 billion (US$367.8 million) in shares to various investors gradually.

Prior to these transactions, the founders held 52.67% of the business (or 453 million shares). Once all three transactions are complete, this shareholding will be reduced to 31.4% in the group.

In the past, company’s margins, were impacted by unrest in the country. Around R40m worth of products were either damaged or stolen and around R70m worth of trading was lost due to the unrest, it said, adding that this would impact its total income by approximately R15m.

However, the situation in Africa’s largest economy has since resolved and the Covid-19 situation looking up. Despite movements throughout the country during the political party campaigns for the Local Government Elections, South Africa continues to record low COVID-19 infections.

South Africa has recorded 169 new COVID-19 cases which brings the total number of laboratory-confirmed cases to 2 922 391.

The 7-day average is 1.3%. The 7-day moving average daily number of cases has decreased. The majority of new cases are from Gauteng province (22%) followed by Free State and KwaZulu-Natal at 17% each.

According to the Department of Health, the increase represents a 0.8% positivity rate. The department said a further 18 COVID-19 related deaths have been reported, bringing total fatalities to 89 197 to date.

 

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