Load Shedding Swells Dis-Chem’s Diesel Costs To R91 Million

Dis-Chem Pharmacies has experienced minimal disruption to its business as a result of the power cuts instigated by struggling power utility Eskom.

The company attributes this to its early investment in generator capacity.

“The group’s strategic early investment in generator capacity has resulted in minimal disruption to our ability to trade but did result in the group’s diesel expense increasing by 65% to R91 million over the corresponding period,” said Saul Saltzman, outgoing CEO of Dis-Chem.

The group expects South African consumers to continue to face financial difficulties.

“While the group has taken the necessary measures to minimise the operational impact of loadshedding, the unavoidable increase in operational costs will continue to impact earnings,” it said.

“The group’s integration into the healthcare value chain reinforces the resilient nature of its current and future earnings profile.”

During the 12-month period to 28 February 2023, Dis-Chem reported revenue growth of 7,4% to R32,7 billion.
Dis-Chem said retail sales grew by 6.5% to R28.9 billion with comparable shop sales increasing by 3.3%.

“Retail revenue growth was impacted by COVID -19 vaccine and testing in the prior period compared to the current period,” said the company. “If the contribution of COVID -19 vaccines and testing are excluded from both periods, retail revenue grew by 8.4%.”

The company added that wholesale sales grew by 10.4% to R24.2 billion.

Wholesale sales to the company’s own retail shops, which remain the largest contributor, increased by 9.6%, while external sales to independent pharmacies and The Local Choice franchises increased by 7.7% and 23.9% respectively over the same period.

The group’s total revenue increased by 15.7% to R10.2 billion, with total revenue margin of 31.1%, compared to 28.9% in the same period.

Dis-chem added that capital expenditure on property, plant and equipment and intangible assets of R1.1 billion included R367 million on expansion expenditure as the company invested in additional shops as well as information technology enhancements in both its retail and wholesale operations.

The balance of R723 million relates to replacement capital expenditure to maintain the existing retail and wholesale network and R496 million for the acquisition of property.