Lloyds Chemists sees 48% surge

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LLOYDS Chemists, the pharmacy and health-food shop chain, pushed profits before tax up 48 per cent for the six-month period to 31 December.

Taxable profits, which include a first-time contribution from Macarthy, the pharmaceutical company Lloyds bought a year ago for pounds 92m, rose to pounds 22.6m from pounds 15.2m. Turnover jumped to pounds 395m from pounds 218m.

Allen Lloyd, the chairman, said sales were very poor in the summer, but picked up towards Christmas and have continued in the second half of the year.

Operating profits from retail outlets - which include the Lloyds Chemists pharmacies, Supersave drugstores and Holland & Barrett health-food shops - rose by a quarter to pounds 21.7m.

Lloyds supplies its own chemists with stock but is also establishing a network to supply independent chemists. Advances at Barclay Enterprise, the independents supplier, led to much better trading profits in Lloyds' wholesaling and manufacturing division. It made pounds 5.4m, up from pounds 600,000. Operating profit margins slipped from 7.5 per cent to 6.4 per cent. The company said the emergence of Barclay, an inherently low-margin business, was behind the fall.

Lloyds Chemists has grown rapidly by acquisition. Some in the City believe it is dependent on acquisitions for growth.

However, Mr Lloyd stressed that yesterday's profit increase was fed by organic as well as acquisition-led growth.

Earnings per share, usually a reliable guide to underlying expansion, increased 16 per cent - more modestly than taxable profits. The half-time dividend increased 29 per cent to 2p.

Lloyds shares have suffered due to the cynical reading of its position. The circulation of bearish rumours led to a collapse in the price last June. Shares fell back 1p to 298p yesterday but still languish well below the 350p attained in the early part of last year.