Operating profit at the company that operates McCabe’s pharmacies plummeted by 41 per cent to €4.4 million in the group’s last financial year.

Accounts filed by Behey Ltd with the Companies Office show that group operating profit declined from €7.5 million to €4.4 million in the financial year to the end of January 2014.

Turnover increased by 3.1 per cent in the year from €57.8 million to €59.6 million. The group made a pre-tax loss of €20.3 million, compared with a pre-tax loss of €462,715 for the year to the end of January 2013.

The directors said turnover increased due to a good performance on the retail side of the business, but that gross margin and gross profit declined due to further reductions in the fees pharmacies receive from the HSE for dispensing medicines.

Numbers employed by the company decreased from 454 to 444, while the group’s staff costs rose by more than €1 million to €10.9 million.

The directors said the outlook for the pharmacy sector will be “extremely challenging”. They pointed to continued private prescription pricing competition, the escalating costs of maintaining pharmacies to comply with regulations and the continued review and reduction of the fees that pharmacies receive from the HSE for dispensing medicines.

The directors recommended the pursuit of cost reductions throughout the entire business in a bid to mitigate the reduction in margins and volume.

The group, which is headed by Sharen McCabe, runs 20 pharmacies across the country, as well as the Radisson Blu Farnham Estate hotel in Co Cavan.