After-tax losses narrow at McCauley Pharmacy group

Cost-cutting measures and job cuts reduce operating costs across group to €48.23 million

McCauley Pharmacy group lost €1.8 million after tax in the year to the end of September 2021, with the Covid-19 pandemic wreaking havoc with walk-in trade across the group’s 37 outlets across the country.

New accounts filed by LVC Remedies Holdings, the holding company in the group in which Carlyle Cardinal Ireland took a majority stake in 2017, show that turnover declined from €83 million in its 2020 financial year to €80.4 million last year, mostly due to a fall in demand for its non-pharmaceutical products with trade constrained due to public-health restrictions.

However, the group’s operating losses declined from more than €1.9 million in 2020 to €1.2 million to just €346,000 in the year, driving the overall decline in after-tax losses from €3.1 million in 2020 to €1.8 million last year.

Cost-cutting measures adopted across the group of pharmacies helped slash administrative expenses from €36.7 million in 2020 to €33.2 million in 2021, while the group’s cost of sales fell from almost €51 million to €48.23 million over the course of its latest financial year.

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Staffing levels across the group fell by 13 per cent in the year to the end of 2021. This had the effect of shaving its wage bill by almost €1.5 million and reducing overall staffing costs — which include pension, redundancy and social insurance costs — by nearly 16 per cent, from close to €18.9 million in 2020 to €15.7 million last year.

In a note attached to the accounts, the group said at the outset of the pandemic it took “immediate actions to address the expected reduction in its revenues and liquidity ... Cost-reduction and efficiency programmes were undertaken ... which have streamlined costs and in turn have improved post-year-end liquidity and cash positions.”

In a separate note, group chairman James Tolan said the overall financial performance was “satisfactory” given the challenges thrown up during the 2021 financial year by the pandemic.

“We had the tragedy of the third wave of Covid-19 during the early part of 2021, which was then followed by the success of the vaccine programme,” he said. “Through the dedication of our staff, we managed to keep all our pharmacies open all the time.”

Mr Tolan said the group’s “improved financial performance” was delivered despite a drop-off in demand for many non-pharmaceutical products.

However, he said the broader pharmacy retail sector is now facing “very significant inflationary challenges as well as a growing shortage of pharmacists”.

Mr Tolan said the sector is the only one involved in the provision of healthcare that has not seen “any increase in rates for which it provides services on behalf of the State for over 10 years”.

He said “if the State continues to pursue a non-strategic approach to its relationship with the pharmacy retail sector”, both the number of pharmacies operating in Ireland and their opening hours will continue to decline.

Ian Curran

Ian Curran is a Business reporter with The Irish Times