Jean Coutu ups dividend 21.4 per cent as shorter Q4 period lowers profit

LONGUEUIL, Que. – The Jean Coutu Group Inc. (TSX:PJC.A) is increasing its dividend more than 20 per cent despite lower profits and revenue in its fiscal fourth quarter, which at 13 weeks was one week shorter than in the final quarter of 2012.

The Quebec-based operator of more than 400 franchised drug stores in Quebec, Ontario and New Brunswick says it earned a net profit of $53.6 million or 25 cents per share in the latest period. That was down from $62 million or 28 cents per share a year ago.

Revenue slipped to $682.7 million from $727.2 million.

For the full, 52-week year, Jean Coutu reported net income of $558.4 million or $2.57 per share on revenue of $2.74 billion.

That compared with net profit of $230 million or $1.03 per share on revenues of $2.73 billion in fiscal 2012, which had 53 weeks.

The increase in revenue was attributable to overall market growth and the expansion of Jean Coutu’s PJC network of franchised stores, despite the additional week in fiscal 2012 and the “deflationary impact on revenue due to the introduction of the generic version of some drugs as well as the price reductions of generic drugs.”

The company said it would increase its dividend 21.4 per cent to 8.5 cents per share from seven cents, payable May 31 to shareholders of record on May 17. Based on Jean Coutu’s closing share price of $16.75 on the Toronto Stock Exchange on Tuesday, the issue would produce an annual yield of just over two per cent.

“We are satisfied with the results of the fourth quarter and fiscal 2013 that demonstrate the solid operational performance of our organization in spite of the difficult regulatory environment in which our industry evolves,” president and CEO Francois Coutu said.

“During the upcoming year, we expect to continue expanding our network and we will be working together with our affiliated pharmacists to implement effective commercial strategies and thus favour retail sales growth.”

Jean Coutu operates a network of 407 franchised stores located in Quebec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Sante and PJC Sante Beaute and employs more than 19,000 people.

It also owns Pro Doc Ltd, a Quebec-based manufacturer of generic drugs and holds an investment in Rite Aid Corp., a national chain of drugstores in the United States with more than 4,600 drugstores in 31 states and the District of Columbia.