Clicks Group earnings up 26% on strong retail trading
Release Date: 2009/10/22
Cape Town – Healthcare retail and supply group Clicks Group increased diluted headline earnings per share by 26.2% to 165.9 cents per share in the year to
31 August 2009, driven by strong trading from the flagship Clicks chain and efficient cash and capital management.
Shareholders will receive a total distribution of 84.0 cents, an increase of 37.5% on the previous financial year.
Group chief executive, David Kneale, said the trading and financial results reflected the clear strategic focus, with the group entrenching its market leading position in healthcare retail and supply. “The high real growth in retail turnover and earnings highlights the defensive nature of our business in the current tough economic climate,” he said.
Group turnover increased by 8.8% to R12.2 billion. Retail turnover rose by 15.4% as the Clicks chain lifted turnover by 17.7%.
Operating margin increased from 5.3% to 5.8%, with the margins of Clicks and UPD both benchmarking favourably against comparable international businesses. The enhanced margin translated into growth of 20.1% in operating profit to R709 million.
Return on equity (ROE) rose strongly from 32.8% to 42.3% and has increased three-fold since 2005. The group has set a revised medium-term target range for ROE of 40% - 50%.
Kneale said Clicks produced another strong all-round trading performance, with second half sales growing by 20.1%. Clicks opened 50 in-store dispensaries during the year and increased its national pharmacy base to 207. In the year ahead Clicks plans to open 20 to 30 new stores and between 30 and 40 pharmacies.
Turnover in UPD increased by 4.4% as the business was repositioned during the year to focus on customer profitability and better operating efficiencies. UPD’s strategy to target loyal, profitable customers has seen sales to its core customer groups of Clicks, Clicks Direct Medicines, hospitals and Link pharmacies increasing to 76% (2008: 65%) of UPD’s wholesale sales.
Despite the slowdown in discretionary spending Musica maintained its operating profit. Musica remains the country’s leading entertainment retailer and continues to gain market share, he said.
The Body Shop benefited from new store openings and increased turnover by 8.7%.
While the group does not expect an increase in consumer spending in the short term, Kneale said growth in the medium-term will be driven through the Clicks Group’s strategy of creating pre-eminence in health and beauty retailing and pre-eminence in healthcare supply and pharmacy management.
“Good organic growth prospects should lead to market share increases through the expansion of the Clicks store base, the opening of further in-store pharmacies, and continued growth in the health and beauty markets. We expect
UPD to benefit from sales growth in Clicks and Link as well as from new revenue opportunities in export sales and third party distribution agencies,” he added.