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Celesio upbeat despite tough UK economic conditions

Business Cost-saving effects not enough to offset tough funding environment, says Celesio, as it announces marginal dip in operating profits

Lloydspharmacy made "good operational progress" last year, but failed to offset the tough funding environment in the UK, parent company Celesio has revealed.


Cost-saving measures such as merging the Lloydspharmacy and AAH headquarters in 2012 were not enough to balance out "negative effects from governmental measures" and the weak pound, Celesio reported in its annual results, released on Tuesday (March 18).


Overall, Celesio's operating profits dipped marginally by 0.7 per cent in 2013 when adjusted for currency effects, to £352.9 million (€423.6m). By the same measure, operating profits in its pharmacy division rose by 0.2 per cent on 2012 to £172.4m (€206.9m).


Cost-saving measures such as merging the Lloydspharmacy and AAH headquarters in 2012 were not enough to balance out "negative effects from governmental measures", said Celesio

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The results marked a slower period of growth than last year, when Celesio reported a 4.5 per cent rise in profits.



Conditions remained tough in Celesio's "most important pharmacy market", the UK, it reported, despite revenue growth in its pharmacy businesses in Sweden, Norway and Italy.


Last month, Celesio managing director Stefan Borchert told C+D that its UK business was the victim of "massive" funding cuts. "The UK is probably the most dominant example of how government cuts are affecting our business and we have to find ways to mitigate this," he revealed in an exclusive interview with C+D.


Celesio maintained that 2013 had nonetheless been a "successful year" overall. It cited its virtual pharmacy network, which now has more than 100 pilot pharmacies, as a particular success. The pharmacy giant was also "more than satisfied" with the results from its efficiency drive, which "most notably" generated savings from the better sourcing of medicines.


Celesio forecast a "slight" growth in profits this year and stronger growth from 2015 onwards, which would be fuelled by efficiency savings and its virtual pharmacy network. In January, Celesio agreed to sell more than 75 per cent of its shares to US healthcare giant McKesson, which pledged it would result in "more efficient delivery of healthcare products and services".

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