Alliance Boots makes a healthy profit

The company behind Boots has had another bumper year - although no progress yet with its search for a new CEO...

by Emma Haslett
Last Updated: 06 Nov 2012
Looks like Alliance Boots, the company behind the high-street chemist, has been taking its vitamins: the chain is positively glowing with health, judging by its latest results. Profits before tax rose by more than a third to £637m (from £460m) in the year to the end of March, its fourth consecutive year of growth. Revenues also rose by 15.1%, to £20.2bn. That's a pretty good performance given the high street's recent woes - particularly since it’s spent the last couple of months without a CEO, after Andy Hornby quit suddenly in March.

Things look encouraging for Boots across the board: retail revenue was up by 1.2% on a like-for-like basis, while trading profit rose by 5.5% and Boots UK saw a 3.6% increase in like-for-like dispensing volumes. Its wholesale division, which sells pharmaceuticals internationally, saw its revenues grow by almost a quarter, with trading profits up by more than a third.

Much of this success was down to Boots' ‘aggressive’ expansion policy, which the company said made a hefty contribution to growth. Boots’ largest acquisitions last year included Turkish and German associates Hedef Alliance and Anzag, the two largest pharmaceutical wholesalers in their respective countries. The £344m worth of deals means its geographical footprint now bears a close resemblance to the Eurovision leaderboard: the company has stores as far afield as Lithuania, Romania, Croatia, Bosnia Herzegovina, Serbia and Slovenia. The first franchised ‘Boots apotek’ opened in March this year.

It’s an impressive showing – particularly considering the fact that Alliance Boots' prospects looked distinctly peakier in 2007, when it was bought by Kohlberg Kravis Roberts. The private equity firm shelled out £11bn for the company just before the credit crunch hit, saddling the business with huge debts just as the world was sinking into recession. But Boots said today that borrowings dropped by £546m last year, to £7.48bn, helping to boost its bottom line.

No word yet, though, on what’s happening with the search for a replacement for Hornby, whose sudden departure to ‘take a few months out’ from corporate life left executive chairman Stefano Pessina (who also owns half of the business) in charge. That said, Pessina is unlikely to be fazed by the extra responsibility - as Retail Week points out, he's regarded as a ‘very hands-on’ chairman. So hands-on that it scares off would-be CEOs, perchance...?


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