Newspaper article The Canadian Press

Jean Coutu Beats Forecasts with Help from Generic Drug Manufacturer: Jean Coutu Gets Continued Help from Pro Doc

Newspaper article The Canadian Press

Jean Coutu Beats Forecasts with Help from Generic Drug Manufacturer: Jean Coutu Gets Continued Help from Pro Doc

Article excerpt

MONTREAL - Jean Coutu's generic drug manufacturer continued to help the pharmacy chain successfully adjust to government-ordered price cuts as the threat of more pain looms on the horizon.

Pro-Doc's gross sales increased by 11.5 per cent to $41.7 million in the fourth quarter, contributing $17.2 million of pre-tax operating earnings, or about 70 per cent of EBITDA growth in the quarter.

"Despite the deflationary impact on gross sales of the price reductions of generic drugs, volume increases allowed Pro-Doc to maintain strong results," chief financial officer Andre Belzile said Thursday during a conference call.

Lower generic drug prices reduced pharmacy sales growth by 0.8 per cent in the quarter, while previously announced government price reductions cut sales by an additional 1.8 per cent.

The last scheduled decrease in generic drug prices was implemented in April.

But the Ontario government recently said it would further cut prices for the top 10 molecules. That is expected to put pressure on the Quebec government to follow suit because it has a rule requiring it to match the best prices in Canada.

"We need, first of all, more clarification about this Ontario proposal. It looks like it's still up for discussions (but) once this is accepted or not, then obviously Quebec will follow," said CEO Francois Coutu.

Jean Coutu (TSX:PJC.A) increased its quarterly dividend by 16.7 per cent to seven cents per share and says it will also repurchase up to 9.4 million shares over the next year.

On the Toronto Stock Exchange, its shares gained 35 cents, or 2.5 per cent, to $14.55 in morning trading Thursday.

Meanwhile, the company said Pro-Doc's performance helped it to report improved results in its fiscal fourth quarter that beat analyst estimates on both profit and revenue.

The Montreal-based company also attributed the improvement to an additional week of operation in the latest period as well as the reversal of $8.1 million of tax.

Jean Coutu earned $62 million or 28 cents per share in the period ended March 3, compared with $46.5 million or 20 cents in the same 2011 period. The tax reversal represented a three-cent gain. …

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