Australian Pharmaceutical Industries Limited, strengthening balance sheet to support growth?
Team Veye | 28 Apr 2020 ASX - APIAustralian Pharmaceutical Industries Limited (ASX: API)
2020 Half Year Results
Operational Results in Line with Expectations
Strengthened Balance Sheet with Net Debt and Cash Conversion Days Reduced
Australian Pharmaceutical Industries Limited (ASX: API) on 23 April 2020 announced for the half year ending 29 February 2020, underlying earnings before interest and tax (EBIT) was $41.7m, down 6.1% on the pcp and underlying NPAT, excluding AASB16 Leases, was $26.3m, down 1.9% on the PCP.
(Chart source: TradingView)
Group Performance
- API delivered in line with expectations
- Total revenue was $2.0 bn, 2.8% up on the prior corresponding period (PCP)
- Underlying earnings before interest and tax (EBIT) was $41.7m, down 6.1% on the PCP
- Underlying net profit after tax (NPAT), excluding AASB16 Leases, of $26.3m, down 1.9% on the PCP
- Reported EBIT of $39.3 million, down 11.5% on the PCP
- Reported NPAT of $22.5m, down 9.9% on the PCP
(Graphic Source – Company Reports)
- Business already prepared for a lower growth environment
- Focus on cash management and assets positioned to sustain through COVID-19 pandemic (Data Source – Company Reports)
Veye’s Take
Australian Pharmaceutical Industries is repositioning for a lower growth economy. API is strengthening its Balance Sheet. It has reduced Adjusted Net Debt to $129.7m, down 50% on the PCP. It is focussing on a lower cost of doing business like it has taken recurring costs out by closing two Distribution Centres, Newcastle and Canberra, these customers now serviced from Sydney. Australian Pharmaceutical Industries is accelerating investment in growth assets. API’s solid result is starting to reflect strategic focus. Its balance sheet strength will support growth. The stock may retrace a little more and stabilise. Veye maintains a "Hold" on “Australian Pharmaceutical Industries Limited” at the current price of $1.055
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