API swings to $23.3m loss

API swings to $23.3m loss

Australian Pharmaceutical Industries (ASX:API) swung to a $23.3 million net loss for the year ending in August, as a result of impairment charges and the loss of key wholesale supplier Pfizer.

The company reported a 10.3% decline in pharmacy sales revenue for the year, during a period marred by what CEO Stephen Roche called “the toughest retail and financing environment in a generation.”

The problem was compounded after pharmaceutical major Pfizer decided to bypass API and start selling its drugs to retailers directly.

Revenue was also impacted by the forced closure of API's Brisbane distribution centre during the Queensland floods, but API said the facility has been recommissioned and expects to return to full supply by early next month.

The $50 million pre-tax impairment charge taken during the first half also contributed to the swing.

The net loss compares to a $22.6 million profit in FY10. But API said underlying profit declined by just $1.8 million over FY11 to $20.8 million.

Now the distribution facility is back online, the company expects to achieve an improvement in FY12 underlying profit, Roche said.

“We've invested significantly in re-engineering our supply chain and shown we can...handle major unforseen impacts like the [closure], he said. “I don't think we'll experience another series of events like we did in FY11.

The company also expects to recover the balance of a $9.1 million insurance claim from the floods this financial year.

API shares fell 3.12% on Thursday to $0.310, putting an end to a five-day streak of closing more than 5% higher.

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