By James Davey
LONDON (Reuters) - Alliance Boots <ABN.UL>, the country's biggest pharmacy chain, posted an 11.6 percent rise in full-year profit and said it had performed well in its new financial year, defying a recession that has hit many of its retail rivals.
But the group, which employs over 110,000 people worldwide, said on Monday a restructuring of its pharmaceutical wholesale division would result in about 1,500 job losses.
Alliance Boots also said it was keeping a close eye on Phoenix, the German drug wholesaler that is owned by the family of Adolf Merckle, the German industrialist who committed suicide in January.
"We just continue to monitor developments there as they're a key competitor of ours in a number of markets in which we operate," Finance Director George Fairweather told reporters.
Executive Chairman Stefano Pessina has previously expressed an interest in bidding for Phoenix, which supplies over 40,000 pharmacies in Europe, should the Merckle family put it up for sale.
Alliance Boots made a trading profit of 953 million pounds for the year to March 31, on a 15.5 percent rise in revenue to 20.5 billion pounds.
After finance costs of 705 million pounds, relating to the group's 11 billion pounds buyout in 2007 by Pessina and private equity firm Kohlberg Kravis Roberts <KKR.UL>, profit was 101 million pounds.
Revenue increased 4.4 percent, or 2.9 percent on a constant currency basis, in the health and beauty retail division, which operates over 3,200 outlets in nine countries.
It was up 17.8 percent, or 3.8 percent at constant currency, in the pharmaceutical wholesale division, which serves over 135,000 pharmacies, doctors, health centres and hospitals in 15 countries.
In the group's core British market like-for-like retail revenue increased 1.3 percent.
Pessina said the results reflected "the underlying strength of our two core business activities, the importance of health and wellbeing to both individuals and governments, and the benefits from transforming our group."
He said he was confident about prospects for the year ahead.
However, Alliance Boots said a restructuring of its pharmaceutical wholesale division in response to "the most difficult market conditions we have seen" will result in a 10 percent reduction in the division's headcount.
The programme is targeted to reduce operating costs by about 55 million pounds a year by 2011/12 and necessitated an exceptional charge of 60 million pounds in 2008/09.
The deal taking Alliance Boots private was Europe's biggest leveraged buyout and the first time a FTSE-100 company had been taken over by a private equity firm.
A year earlier, the group was created from the merger of British health and beauty retailer Boots and pan-European drugs distributor Alliance UniChem.
It said on Monday a 100 million pounds merger cost synergy target had been achieved 18 months ahead of schedule.
In the year to end-March Alliance Boots acquired Megapharm in Germany, Depolabo in France and Central Homecare in the UK.
It ended the year with net debt of 9.0 billion pounds, most of which does not mature until 2014 and 2017.
(Editing by David Cowell and Mark Potter)