Alliance Boots, the parent company of High Street of health and beauty chain Boots, caught a cold last year as profits fell on the back a cut in governmental reimbursement for generic medicines and reduced sales of cold and flu products.
Profit before tax in the year to March 31st fell 2.3% from £676m the year before to £660m, on revenues of £23bn, up from £19.4bn the previous year.
Earning before interest, tax, depreciation and amortisation rose 10.2% to £1,443m.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Stefano Pessina, Executive Chairman, said: "In the coming year, we expect the economic environment to remain difficult with continuing pressure on both consumer and governmental expenditure. This will generate both challenges and new opportunities for us.
"We are confident about our future prospects and ability to pursue profitable growth, both organically and through further international expansion. This will be supported by our strong operating cash flow and secure funding arrangements, which will enable us to continue to invest while at the same time reducing net borrowings. The development of new and existing partnerships will be a key component of our future growth."
In the UK, trading profit increased by 5.2% to £750m, with the trading margin increasing by 0.6 percentage points to 11.2%. Revenue was 0.2% lower at £6,706m due to lower dispensing reimbursement rates. Revenue from dispensing and related income decreased by 1.6% in value due to lower average revenue per prescription which more than offset growth in dispensing volumes and fee income.
Boots Opticians revenue increased by 0.9%, while like-for-like revenue from owned practices increased by 1.6% due to good growth in eye test, spectacle and contact lens volumes.
The pharmaceutical wholesale division continued to grow, achieving strong year-on-year revenue and profit growth despite challenging market conditions in many countries. This was achieved through a combination of organic growth, benefits from the division-wide business improvement programme and the impact of prior year acquisitions.
In 2007, the company was taken private in a £12.4bn takeover by its current Executive Chairman Pessina and private equity group Kohlberg Kravis Roberts.
Energy price cap to fall 12.3% from April - what it means for your energy bills
Ofgem, the energy regulator has set its latest price cap which will see energy bill drop by 12.3% this spring. Here's what to expect from April
By Henry Sandercock Last updated
The end of China’s boom
Like the US, China too got fat on fake money. Now, China's doom is not far away.
By Bill Bonner Published