By Durrant Pate/Contributor

Pharmacy chain Fontana attained record-breaking revenues during the 2023/2024 financial year ended June 30.

Revenues for the year surged to $8.1 billion, representing an 11 per cent increase over the $7.3 billion recorded in the comparable period last year. The addition of its seventh store in Portmore, St Catherine, was a contributing factor to the revenue growth for the year. 

The company’s key revenue metrics comprising customer count and average transaction size continue to grow year-over-year with the management highlighting that it continues to see growth across all product lines and segments.

Gross profit amounted to $3 billion or 16.4 per cent higher than $2.6 billion in 2023 while gross margins improved to 37.7 per cent from 35.9 cent last year. This improvement resulted from efficiencies in the pharmacy chain’s procurement processes as well as capitalising on economies of scale.

Operating expenses grew by 25.5 per cent, ending the year at $2.4 billion compared to J$1.9 billion last year. 

Portmore branch increased expenses

The addition of the Portmore store contributed significantly to these increased expenses along with costs associated with its well-received 55th anniversary celebrations in May. Fontana invested heavily in customer service training, having onboarded new team members and reinforced its service standards to the team.

The Caribbean has faced significant increases in insurance rates and commercial security costs over the past year, and Fontana was not exempt. Despite these challenges, the Kevin O’brien Chang-chaired company was able to improve efficiencies and manage its costs effectively.

As a result of these efforts, operating profit declined by only 6.6 per cent, ending the period at $696.5 million versus $745.7 million last year. Finance costs increased 4.4 per cent, moving from $196 million last year to $205 million this year, all attributable to the new store. 

Total tax liability increased to $40.1 million, up from $1.6 million in the prior year. This was due to increases in deferred taxation of $11.3 million, as well as corporate income tax for the January to June 2024 period closing on $28.8 million, with Fontana’s five-year tax-free period having ended in January 2024.

Profitability waned

Net profit attributable to shareholders for the year amounted to $589.8 million, reflecting a reduction of 10 per cent from the $655.2 million earned in the previous year. Cash balances improved by 6.3 per cent, ending the year at $1.7 billion compared to $1.6 billion for the comparable period last year. 

Shareholder equity grew by $464.8 million, an increase of 19 per cent over last year, after the provision of dividends totalling $124.9 million. Net Assets increased by 10.6 per cent, mainly due to the acquisition of inventory and other assets for the new store, ending the year at $5.7 billion.