The Sigma Healthcare Ltd (ASX: SIG) share price is plunging today after the company predicted its earnings will fall this financial year.
The Sigma share price is currently down by 6.67%, trading hands at 49 cents a piece. This is a 52-week low for the company.
Sigma is a pharmacy chain operator and distributor with a network of more than 1,200 pharmacies including well-known brands Chemist King, Amcal and Discount Drug Stores.
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What did Sigma announce?
In today's release, Sigma predicted its earnings before interest, taxes, depreciation, and amortisation (EBITDA) would drop by 10% in FY22.
The company downgraded its earnings forecast because of impacted sales and operating costs due to a major software update and COVID-19 restrictions. The company implemented a new enterprise resource planning system during the height of pandemic restrictions.
Sigma expects one-off and non-operating costs to be up $25 to $30 million, also proportionally impacting debt.
But while the prediction for FY22 is negative, the company reported 5% growth in September.
And the company also has a positive outlook on future growth overall.
Chairman Ray Gunston said:
Not withstanding this set-back, we remain confident in the future growth profile for Sigma, which was further underlined with the Sigma board recently approving the extension to our new Victorian Distribution Centre in Truganina.
We remain focused on growing our core business, whilst continuing to build on business expansion opportunities across areas such as hospital services, contract logistics and medical devices and consumables…
Sigma expects to announce its FY22 results on 29 March.
Sigma share price snapshot
Over the past 12 months, Sigma shares have dropped almost 17%. The Sigma share price is down 21% year to date. It reached a yearly high of 73 cents on 8 February. At 49 cents apiece, today's price at the time of writing is a yearly low for the company.
Based on today's share price, Sigma has a market capitalisation of roughly $514 million.
