Sigma Healthcare reports a robust 41% rise in EBIT following its merger with Chemist Warehouse, upgrading synergy targets and expanding its retail footprint internationally.
- Normalised EBIT up 41.4% to $834.5 million
- Synergy target increased from $60 million to $100 million per annum
- Retail network sales grow 14% to $10.3 billion with 11.3% like-for-like growth
- 35 new Chemist Warehouse stores opened domestically and internationally
- Supply chain efficiencies reduce logistics costs per unit by 11%
Strong Post-Merger Growth
Sigma Healthcare has unveiled its first full-year results since merging with Chemist Warehouse Group, showcasing a significant leap in earnings and operational scale. The company reported a 41.4% increase in normalised EBIT to $834.5 million for FY25, reflecting the combined strength of the newly integrated business.
This performance underscores the merger’s success in creating a more formidable healthcare retailer and wholesaler with enhanced market reach and capabilities. The pro-forma EBIT, assuming the merger had occurred at the start of the financial year, reached an impressive $903.4 million, signalling strong momentum.
Retail Expansion and Sales Momentum
The Chemist Warehouse retail network remains a key growth driver, with total retail sales climbing 14% to $10.3 billion. Like-for-like sales across Australian stores surged 11.3%, buoyed by robust demand across categories such as beauty, vitamins, healthcare, and baby products. The network expanded by 35 stores, maintaining a consistent growth trajectory both domestically and internationally, including markets like New Zealand, Ireland, and the UAE.
Notably, Sigma accelerated its own and exclusive brand strategy, launching 269 Wagner generics products in late 2024. These products contributed to a more than 20% increase in sales of private label goods, enhancing margins and customer loyalty.
Operational Efficiencies and Synergy Upside
Supply chain integration has been a standout success, with the combined distribution network managing a 29% volume increase while reducing logistics costs per unit by 11%. This efficiency gain is critical as Sigma services over 532 million units annually.
Reflecting confidence in integration progress, Sigma upgraded its synergy target from $60 million to $100 million per annum, expected to be realised within four years. The company plans to consolidate distribution centres and support offices to streamline operations further, with some closures scheduled by late 2026.
Financial Health and Outlook
Sigma’s financial position remains solid, with net debt at $752.2 million; well below initial merger guidance; and strong operating cash flow of $546 million. The company declared a fully franked final dividend of 1.3 cents per share, reflecting confidence in sustainable shareholder returns.
Looking ahead, FY26 has started positively with continued double-digit like-for-like sales growth. Sigma intends to maintain its store rollout pace and expand its own brand offerings, with most synergy benefits expected to materialise from FY27 onwards. The strategic decision to close physical stores in China in favour of online channels also signals a focus on profitable growth and operational efficiency.
Bottom Line?
Sigma’s strong FY25 results and upgraded synergy targets set the stage for sustained growth, but execution risks around integration remain key to watch.
Questions in the middle?
- How quickly will the upgraded $100 million synergy target be realised in practice?
- What impact will distribution centre closures have on service levels and costs?
- How will Sigma’s international expansion balance growth with profitability, especially in new markets?