Australian Pharmaceutical Industries (API) stands at the top of the Australian healthcare sector simply by meeting guidance.
Only pathology group. Sonic, could challenge it for consistency and meeting the expectations of investors.
Sigma is a basket case after its huge $389 million loss and the departure of its CEO; Primary is struggling to integrate and stabilise itself after taking over Symbian, and Healthscope is struggling with costs and a botched expansion into aged care.
API was in the same position several years ago after a computer changeover went wrong, costing the company meant millions of dollars in phantom stock that went missing and other problems.
That saw senior management changes and a honing of its business plan and retail strategy.
And, as a result, it has survived to be probably the best performer in the healthcare sector.
Simply by performing and doing the simple things better than its rivals.
Yesterday it confirmed its annual profit guidance after lifting first half net profit by more than 50%.
"API confirms previously provided guidance of $24.6 million for the full year," API said in a statement to the ASX yesterday.
"Key assumptions include no material changes to the regulatory environment and no further reduction in consumer demand."
API said net profit after tax for the six months to February 28, 2010 was $10.33 million, up 54.5% on the previous corresponding period on revenue which grew 6.7% to $1.85 billion.
The company declared an interim dividend of one cent per share, against no payment in the previous corresponding period.
API chief executive, Stephen Roche, said API’s business was strong despite declining consumer confidence and spending.
API’s pharmacy division (including Soul Patts chemists) generated sales growth of 7.4% and growth in earnings before interest and tax of 8.7%.
API said sales growth in pharmacy was strong and margins had been maintained as the division focused on working capital and customer trading terms and planned for further government reforms to the Pharmaceutical Benefits Scheme.
API said its alliance with generic drugs supplier Alphapharm continued to deliver value and positioned the company to deal with competitive pressures in the growing generic drugs market.
New formats introduced for the Soul Pattinson and Pharmacist Advice pharmacy banners, and the API member program had been well accepted.
API said sales in the Priceline health and beauty stores grew 5.3%, with comparable store sales up 2%.
"Our significant investment in the brand through media and other mediums has paid off, with consumers recognising the value and quality offering in both our Priceline and franchised Priceline Pharmacy stores," Mr Roche said in the statement to the ASX.
"We continue to focus on a controlled expansion of our Priceline network, aiming for 400 stores in 2011.
"Economic conditions will largely dictate the speed of our expansion, either through new stores or conversion of company owned stores, but we are making sure we have the right foundations in place to prudently grow the network."
API shares ended the day unchanged on 58c.
