Dis-Chem sees double-digit earnings and dividend growth

Its life insurance offering will launch in the first quarter of 2025.

South African pharmacy group Dis-Chem reported a 16.3% jump in headline earnings for the six months ended 31 August 2024, it announced on Sens on Friday.

Dis-Chem also posted a 16.1% surge in its dividend per share, which amounts to 26.98 cents, compared to 23.2 cents in the corresponding period in 2023.

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Read: Dis-Chem exec sells over R340m in stock

The group’s share price traded over 2% lower on Friday morning, at around R36.35 a share.

Dis-Chem attributes the strong earnings growth largely to the containment of group payroll costs, predominantly driven by the successful deployment of its ‘staffing framework 1.0’-strategy. Staffing framework 1.0 focuses on achieving the optimal mix of staff to ensure efficient operations at store level.

In the period under review, Dis-Chem’s like-for-like retail employee costs increased by just 0.7%, but wholesale expenses jumped 13.2% – mainly as a result of the acquisition of the Longmeadow warehouse in Gauteng.

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For the half-year, Dis-Chem saw its revenue rise by 9.6% to R19.6 billion, while operating profit surged 17.5%.

Six new retail pharmacy stores were opened, resulting in 274 retail pharmacy stores and 53 retail baby stores as at 31 August 2024, it noted.

Outlook

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Dis-Chem Life – the group’s own life insurance business – will launch in the first quarter of 2025. The group announced earlier this year at its annual results presentation that it had entered into agreements to invest in the life segment, in addition to its existing health cover.

In 2022, the group launched medical insurance and gap cover products under the Dis-Chem Health brand, specifically aimed at the South African retail market that lacks private healthcare.

Dis-Chem will also continue expanding its retail space by an additional 30 000m2 and further expand its whole market share by transitioning its independent pharmacy pipeline into The Local Choice (TLC) franchise stores.

Read: Dis-Chem founders sell head office to group for R500m

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