The billionaire boss of Alliance Boots has given an upbeat assessment on trading after revealing a 20% jump in profits for the healthcare group.
The trading surplus of £771 million in the year to March 31 included nine months of trading as a private company following the £11.1 billion takeover by Stefano Pessina and private equity firm Kohlberg Kravis Roberts.
Mr Pessina, who is executive chairman, said the group continued to perform well in the current financial year, helped by strong market positions in the health and beauty retail sector and in pharmaceutical wholesaling.
He added: "We remain confident about our prospects for the year ahead, despite the weaker outlook for overall consumer spending in the UK."
Alliance Boots, which was formed from the merger of Boots and Alliance UniChem two years ago, employs more than 110,000 staff in over 20 countries. It has 370 pharmaceutical wholesale warehouses delivering to more than 135,000 pharmacies, health centres and hospitals. There are also 3,200 retail outlets.
Revenues in health and beauty retail were up by 4.2% to £6.85 billion, helping trading profits for the division improve by 20.1% to £603 million.
The Nottingham-based company said the focus of the retail arm during the year had been on integrating the Boots and Alliance Pharmacy brands in the UK, including the rebranding of its community pharmacies. It has also looked to develop Boots outside the UK.
In wholesale, revenues were up 5.8% to £9.56 billion with profits ahead 15.7% at £206 million.
During the year Alliance Boots said it delivered £68 million of merger cost savings, mainly from unified buying prices and reduced corporate costs. It remains on track for £100 million of annual cost savings by the end of July.
Mr Pessina has already disclosed that he will not take dividend payments this year or next as he looks to grow the business. He made £1.67 billion on his 16% stake in Alliance Boots and then pumped £1.27 billion back into the business following the completion of last year's takeover, which saw the first FTSE 100 Index firm fall into private equity hands.
The group also faces steep interest payments on the £9 billion in debt used to fund the takeover deal. Its banks have been unable to sell on much of the debt since the credit crunch squeezed financial markets last year.