Sinopharm Group (1099) Q2 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 was RMB294,726.81 million, down 2.07% year-over-year, mainly due to declines in retail pharmacy and medical device distribution segments; net profit attributable to owners was RMB3,703.88 million, down 9.76%.

• Net profit was RMB5,899.22 million, a decrease of 14.42% compared to the same period last year.

• Gross margin declined to 7.45% from 7.73% year-over-year; net profit margin decreased to 2.00%.

• Pharmaceutical distribution revenue grew 0.47%, while medical device and retail pharmacy revenues declined 7.08% and 6.43%, respectively.

• Digital transformation and logistics integration advanced, with notable achievements in data management, green logistics, and service model innovation.

Financial highlights

• Operating margin dropped to 2.79% from 3.18% year-over-year; basic EPS was RMB1.19, down 9.85%.

• Gross profit was RMB21,943.30 million, a 5.70% decrease; cost of sales decreased 1.76% to RMB272,783.52 million.

• Net finance costs decreased to RMB1,073.87 million, reflecting lower weighted loan principal.

• Selling and administrative expense ratios slightly increased; finance costs ratio improved to 0.36%.

• Loss ratio on derecognition of financial assets improved to 0.06%.

Outlook and guidance

• Plans to enrich pharmaceutical distribution categories, expand volume-based procurement, and strengthen upstream cooperation.

• Medical device segment to focus on compliance, supply chain efficiency, and expansion of SPD and centralised distribution projects.

• Retail pharmacy to optimise store layout, expand specialised services, and accelerate online-offline integration.

• Continued emphasis on digital transformation, AI applications, and operational quality improvement.