Alliance Boots' trading profit soars as it targets international growth

The group posted trading profit up 12.4% to £1.2bn for the year to March 31, when revenue surged 18.4% to £23bn. Group EBITDA advanced 10.2% to £1.44bn.

Trading profit at Boots UK increased 5.2% to £750m but revenue slipped 0.2% to £6.7bn because of lower dispensing reimbursement rates set by the Government.  Like-for-like sales fell 1.1%.

Alliance Boots executive chairman Stefano Pessina said: “Alliance Boots has again delivered double digit growth in trading profit while at the same time generating a strong operating cash flow to find investment in growth and substantially reduce net borrowings.

“This performance, which reflects the excellent work of our teams, has been achieved through a combination of organic growth and benefits from the previous year’s acquisitions, is particularly encouraging given the challenging economic environment.”

Pessina said “a key component” for the group ‘s future would be to develop new partnerships to grow internationally by expanding in current locations and new countries, as well as driving internationalisation of its own-brands, such as No7.

“In the coming year, we expect the economic environment to remain difficult with continuing pressure on both consumer and governmental expenditure. This will generate both challenges and new opportunities for us,” said Pessina.

“We are confident about our future prospects and ability to pursue profitable growth, both organically and through further international expansion.”

Boots, which has 2,477 stores in the UK, is continuing to invest in new product development as own-brand products “are very important drivers of revenue and margin”.

Boots’ online sales “grew strongly” over the year and the number of visitors to the site “significantly” increased. Order online and collect in store services comprised over 45% of online orders in the year. The Burton on Trent distribution centre, which opened at the beginning of the year, is expected to bolster growing online sales.

Within Boots UK revenue at the retailer’s beauty and toiletries division grew 2% to £2.15bn but the retail health division was hit by a lower level of cough and cold-related non-prescription medicines due to a “significantly lower” incidence of such ailments with revenue dropping 2.4% to £891m. Revenue at the lifestyle division which includes photography and electrical beauty slipped 0.1% to £962m.

During the year Boots Advantage Card accounts increased 6%.