KUALA LUMPUR: Lower selling prices due to intense competition contributed to Caring Pharmacy Group Bhd’s lower profit margin in its second quarter ended Nov 30, 2014 (2QFY15).

The retail pharmacy group announced its results yesterday, which showed profit before tax falling 17.17% to RM2.96 million, from RM3.57 million a year ago.

“The decrease in profit before tax for the current quarter compared to the corresponding quarter in the preceding year, is mainly due to lower profit margin arising from lower selling price resulting from market competition,” it said.

Net profit rose 14.8% to RM2.09 million in the quarter from RM1.82 million a year ago, mainly due to lower taxation.

Caring’s (fundamental: 2.05; valuation: 0.3) revenue for the quarter rose 5.4% to RM89.01 million from RM84.45 million previously.

Caring said the higher revenue was mainly contributed by 12 new outlets which commenced operations in the second half (2H) of FY14, and four new outlets that opened in 1HFY15.

For the six months to Nov 30, 2014, net profit plunged 63.4% to RM2.6 million from RM7.2 million a year ago, although revenue rose 5.8% to RM177.4 million from RM167.7 million.

“In view of stiff market competition, the group will relook its marketing strategies to improve sales and maintain market share,” Caring commented on its prospects.

The firm remains confident that it will continue to perform profitably in the next quarter.

Caring ended one sen or 0.8% lower to RM1.19 a share, giving it a market capitalisation of RM259.07 million.

The share price of the pharmacy operator had tumbled below its initial offer price of RM1.25, and further below its debut price of RM1.75 on Nov 13, 2013.

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This article first appeared in The Edge Financial Daily, on January 28, 2015.