Alliance Boots, owner of Europe’s biggest pharmacy chain, is looking to expand through partnership deals in Asia and Latin America, financed by its own cash flows, it said yesterday.
“We’re looking at key markets where there’s large populations, where there’s long-term growth in healthcare expenditure, and there’s scope for consolidation,” finance director George Fairweather told Reuters.
“Our strategy when entering markets is typically to work in partnership, where we will take an investment that we can seek to grow over time, working closely with the local people leading the business.”
Fairweather said that, having generated cash of £1.6bn (€1.99bn) in the 2011-12 year, Alliance Boots could afford to both invest and pay down its debt.
The group was taken private for £11bn in 2007 by executive chairman Stefano Pessina and private equity firm KKR in what at the time was Europe’s biggest leveraged buyout.
In the year to Mar 31, the firm posted a 12.4% rise in trading profit to £1.2bn on revenue up 18.4% to $23bn and cut its borrowings by £826m to just over £7bn.
With consumers across Europe grappling with austerity measures, tax rises, inflation, and fallout from the eurozone debt crisis, the group cautioned it expected the economic environment to remain difficult, with continuing pressure on both consumer and government expenditure.
However, Alliance Boots said it was still confident of profitable growth.
Revenue rose 0.6% in Alliance Boots’ health and beauty division, with like-for-like sales up 0.8% at Boots UK. Revenue jumped 27.9% in its pharmaceutical wholesale division, reflecting acquisitions in Turkey and Germany.
Alliance Boots, headquartered in the small town of Zug in Switzerland, has been criticised by tax protesters who accuse it of avoiding tax in the UK.
“Our numbers have not always been well understood,” said Fairweather, noting tax paid in the UK for the 2011-12 year was £26m.
“Just to put it in perspective, had we not paid the additional contributions to the pension scheme on deficits (which is tax deductible) it would have been £72m,” he said.
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