UPDATE 1-South Africa's Dis-Chem posts 16.2% rise in H1 earnings

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UPDATE 1-South Africa's Dis-Chem posts 16.2% rise in H1 earnings

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JOHANNESBURG, Nov 5 (Reuters) - South African drug store chain Dis-Chem Pharmacies Ltd reported on Thursday a 16.2% rise in half-year earnings as it benefited from being an essential services provider during the COVID-19 pandemic, although it was restricted from selling some items.

At 0714 GMT, shares in TFG jumped to a six-month high, up 9%.

Headline earnings per share, the main profit measure in South Africa, for the six months ended Aug. 31 rose to 36 cents from 31 cents in 2019.

During the initial stage of the lockdown period, Dis-Chem DCPJ.J was unable to sell 20% of its products, including higher-margin products from its beauty category, the firm said.

The country also experienced fewer cold and flu cases than in previous years as a result of social distancing, increased sanitising measures, people working from home and children not going to school.

"This adversely impacted the dispensary category, specifically over-the-counter sales. Strong chronic drug adherence due to health education, awareness and higher patient risk, partially offset the impact," the country's second-largest drugstore chain by market value said.

Group revenue rose by 8.1% to 12.8 billion rand, with retail revenue growth of 6% and wholesale revenue growth of 14.9%.

Dis-Chem said it is slowly starting to see the sales and gross margin mix normalise but continues to expect gross margin to track behind sales growth into the second half of the financial year.

For the nine weeks to Oct. 31, group revenue grew by 7.1% from the prior comparable period.

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