Acquisitions aimed at underpinning Hikma Pharmaceuticals' position in the Middle East, combined with more stable trading conditions, led to a surging in the Jordanian company's first-half sales. When these gains are stripped out, organic sales growth was closer to trend at 7.6 per cent, with growth in injectables partially offsetting higher operating costs and regulatory delays.
The worst of the disruption caused by the Arab Spring seems to have abated but Hikma's generics division is still a source of problems. This time a longer than anticipated regulatory inspection of its Eatontown manufacturing facility, following a FDA warning letter in February, and increased pricing pressure, sent generics revenues tumbling 27 per cent to $55.8m (£35.5m). Operating profits of $10.2m in the first half last year turned into a loss of $3.3m, although the business should break even by the year-end.
By contrast, the branded medicines business enjoyed organic sales growth of 12.8 per cent with the recovery led by better conditions in Libya and Egypt. However, higher costs held back operating profits, which were only 5 per cent higher at $47.4m on revenues up 25 per cent to $249m. The injectables business performed the best, with product launches and profitable contract manufacturing sending underlying sales up by a quarter to $225m and with margins rising sharply, the operation more than trebled profits to $47.7m.
Broker Peel Hunt forecasts full-year adjusted EPS of 55.4¢ (2011: 51¢), rising to 72.7¢ in 2013.
HIKMA PHARMACEUTICALS (HIK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 773p | MARKET VALUE: | £1.52bn | |
| TOUCH: | 772-774p | 12-MONTH HIGH: | 780p | LOW: 550p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 393¢* | NET DEBT: | 60% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 394 | 39.8 | 17.1 | 5.5 |
| 2012 | 532 | 57.8 | 20.6 | 6.0 |
| % change | +35 | +45 | +20 | +9 |
Ex-div: 29 Aug Payment: 8 Oct *Includes intangible assets of £426m, or 216¢ a share £1=US$1.57 | ||||
