Branded and generic medicines company
Branded pharmaceuticals was the segment most exposed to ructions in the Middle East, so for this business to grow underlying sales by 9.6 per cent was quite some achievement. However, higher inflation in the MENA region, lower prices for locally produced medicines and increased raw materials costs combined to keep operating profits flat at $98.5m.
Times were even tougher at Hikma's generics division, which had to contend with the discontinuation of gout medicine colchicine, cost pressures in the US and a lack of product launches. When combined, this led to a 67 per cent fall in operating profit to $17.1m. However, the shortfall was made up by the injectables business, which was boosted by the acquisition of MSI last May and established Hikma as the second-largest supplier in the US. This added $120m to revenues, but on an underlying basis turnover was still up 23.3 per cent with a notable improvement in margins.
Broker Peel Hunt may cut its EPS estimate of 60.7¢ by 5 per cent due to a higher tax charge (51¢ in 2011).
|HIKMA PHARMACEUTICALS (HIK)|
|ORD PRICE:||773p||MARKET VALUE:||£1.5bn|
|TOUCH:||772-773p||12-MONTH HIGH:||878p||LOW: 536p|
|DIVIDEND YIELD:||1.1%||PE RATIO:||29|
|NET ASSET VALUE:||396¢*||NET DEBT:||53%|
Hikma's shares have rallied 38 per cent since the autumn and trade on 20 times earnings, a hefty 20 per cent premium to peers. Given its reliance on an unstable MENA markets, it's time to sell.
visible-status-Standard story-url-Hikma Full year 2011 14 Mar 2012.xml