Healthcare products distributor and retailer, EBOS
(ASX:EBO), has raised its dividend by 7.5% following a solid increase in sales and earnings across Australia and New Zealand for the six months ending December.
The interim payout has been set at 57 NZ cents per share, reflecting a 7.1% revenue increase to $6.6 billion and a 7.6% rise in underlying net earnings to $152.4 million.
Directors attribute the result to "continued strong performances from both our Healthcare and Animal Care segments, with Healthcare Underlying EBITDA up 8.0% and Animal Care Underlying EBITDA up 8.6%."
Despite this success, the company faces challenges in replacing the significant Chemist Warehouse contract set to expire in June. EBOS reports that its underlying EBITDA rose 8.3% to $313.2 million, but emphasizes that it's even stronger when excluding the impact of the Chemist Warehouse contract.
During the half, EBOS attempted to offset the contract loss with the acquisition of Greencross, but balked at the cost and incurred a $10 million charge in the latest accounts. Nevertheless, the company made other investments, including increasing its shareholding in Transmedic to 90%, acquiring Superior Pet Food Co., and investing $66 million in operational infrastructure.
In its outlook statement, EBOS remains optimistic, expecting organic earnings growth across both Healthcare and Animal Care segments. It plans to continue servicing the Chemist Warehouse Australia contract until its expiry date and anticipates slightly higher capital expenditure in FY24 to facilitate growth and modernization.
With a strong balance sheet, EBOS is well-positioned to pursue growth opportunities despite challenges in the contract landscape.
