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Australian Pharmaceutical Industries (ASX: API) will push ahead with the expansion of its Priceline pharmacy network despite flagging a fall in first-half profit.
API says net profit for the six months to 28 February will be about $26.5 million, down nine per cent on the prior corresponding period, while full-year net profit is expected to be marginally above the $52.4 million reported for the 2017 financial year.
The company says weak retail sales at its Priceline pharmacies before and during the Christmas trading season had driven the result. Overall network sales for the year to date were up two per cent while like-for-like front-of-store sales had fallen 2.4 per cent for the period.
"In contrast to the strong sales we experienced during 2016, consumer spending remained subdued throughout the 2017 calendar year and we did not see that change during the Christmas period," chief executive Richard Vincent says.
API says it still expects to increase Priceline and Priceline Pharmacy store numbers and that its pharmacy distribution business had continued to perform to expectations.
"We expect to see benefits flow from the steps we have taken to address the tougher retail environment," Vincent says.
"We have adjusted the business cost base while we've strengthened and streamlined our retail leadership team to drive a more responsive business in the changing consumer environment, particularly in the important beauty segment."
The dividend payment for the first half is expected to remain in line with the prior corresponding period's 2.5 cents per share, fully franked.
Shares in API were trading down by 7 per cent to $1.37 at around 11am (AEDT).
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