Fontana record run continues
Published:Friday | September 1, 2023 | 12:08 AM
Pharmacy operator Fontana Limited made record revenue and profit for its full financial year.
The company’s annual revenue, at $7.3 billion, grew 15 per cent at year ending June, while its earnings climbed by eight per cent to $665 million.
The company’s performance outpaced inflation, which cooled to 6.3 per cent in June. Inflation ticked back up to 6.6 per cent in July and is considered to be elevated, as it sits above the central bank’s target range of 4.0 to 6.0 per cent.
Fontana CEO Anne Chang partly credited the company’s performance to a new point-of-sale system that cost some $57 million in the year to implement, saying it allowed the chain to replenish fast-moving items more effectively.
“It also allows us to ensure that we have the goods people want, when they want,” Chang told the Financial Gleaner.
“Additionally, we have improved our overseas purchasing to fill the void left by local suppliers – areas and items that are not readily available locally but are in demand,” she said.
But Chang also credited brand loyalty as a driver of sales, notwithstanding inflationary pressures.
“While discretionary spending may be reduced overall, they [customers] are choosing to spend it with us,” she said.
Fontana operates six stores in various parishes and is about to add a seventh location in Portmore.
The company’s growth trajectory has resulted in it doubling annual profit from 2019, that is, the year prior to the onset of the coronavirus pandemic. At that time, it earned $3.7 billion in revenue and $306.6 million in profit.
At Fontana, operating expenses jumped 26 per cent to $1.9 billion, from $1.5 billion a year earlier. The additional spend was mostly ascribed to higher staff costs, along with increased inventory at the new warehouse in Ferry and new store to open in Portmore, St Catherine. The higher costs negatively affected its operating profit, which dipped two per cent year-on-year.
Fontana said the decline was kept shallow through cost-containment measures.
“We also negotiated well in the face of increasing security, insurance, and software support costs as we pushed to keep costs at a manageable level,” the company said in its earnings report.
During the year, the company grew its equity base by 13 per cent to $2.44 billion, even after two dividend distributions. Net assets also rose by some 13 per cent due to the acquisition of inventories and assets for the upcoming store launch in Portmore.
“In preparation for the opening of our new Portmore location later this year, we supplemented the shared services so that proper coverage could be allocated to logistics, warehousing, and loss prevention,” the company said.