(Reuters) - Canadian pharmacy chain Jean Coutu Group Inc’s PJCa.TO fourth-quarter profit missed analysts’ expectations as tighter price controls for generic drugs hit revenue.
Price controls have crimped prescription sales growth at Jean Coutu Group and rivals such as Shoppers Drug Mart SC.TO in recent years. Increasing use of generic drugs has also exacerbated the impact of lower prices.
The company, however, raised its quarterly dividend by 21.4 percent to 8.5 Canadian cents per share.
Excluding a gain related to Jean Coutu’s stake in U.S. drugstore chain Rite Aid Corp (RAD.N) and other one-time items, Jean Coutu earned 25 Canadian cents per share for the quarter.
Analysts on average expected the company to earn 26 Canadian cents per share, according to Thomson Reuters I/B/E/S.
The company said 63.2 percent of prescriptions were for generics during its fourth quarter, up from 57.4 percent in the same quarter last year.
Total sales fell to C$682.7 million. Same-store sales, however, were up 0.5 percent. Year-ago numbers were benefited by the presence of an additional reporting week.
Pharmacy same-store sales fell 0.1 percent while that of non-pharmacy, or “front-end” goods that include food and cosmetics, rose 1.3 percent.
Net profit declined to C$53.6 million ($53.3 million), or 25 Canadian cents a share, from C$62 million, or 28 Canadian cents per share, a year earlier.
The company, which has the bulk of its stores in Quebec, also operates in Ontario and New Brunswick.
Jean Coutu also said it will set aside about C$51 million in fiscal 2014 for capital expenditure and banner development.
Competitor Shoppers Drug Mart, which posted a flat profit last week, said tightened pricing controls for generic drugs will push its 2013 pharmacy same-store sales outlook to the lower end of its previous guidance.
Shares of the Longueuil, Quebec-based company closed at C$16.75 on the Toronto Stock Exchange on Tuesday.
($1 = 1.0059 Canadian dollars)
Reporting by Krithika Krishnamurthy in Bangalore; Editing by Sreejiraj Eluvangal