Drugs maker Hikma (HIK) has had a turbulent six months during which uncertainty surrounding the recent acquisition of West-Ward Columbus (previously Roxane Laboratories) played havoc with its share price. Investors were again unimpressed when, earlier this month, management revealed that West-Ward had not performed as well as hoped due to an unexpected delay in product approvals. But they were no doubt this morning relieved with assurance that the integration of the US company is otherwise progressing well, with $35m-$45m of cost savings expected by end-2017.
The four-month contribution of West-Ward boosted revenue in the generics division from $79m to $257m, while the injectables business benefited from new product launches from Bedford Laboratories, acquired in 2014. In the branded division, an increased focus on higher-value products helped to keep constant currency revenues flat, however currency falls in Middle Eastern markets saw reported revenue there fall 6 per cent.
Currency movements also hit core operating profit, which fell 14 per cent after stripping out costs associated with the acquisition. The total group expenses in the period rose by almost a half, with research and development expenses more than doubling to $57m - a result of the hefty costs at West-Ward.
Broker Stifel expects 2016 full-year adjusted EPS of 112ȼ, down from 144ȼ in the previous year.
HIKMA (HIK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,303p | MARKET VALUE: | £5.52bn | |
| TOUCH: | 2,303-2,306p | 12-MONTH HIGH / LOW: | 2,703p | 1,575p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 994ȼ* | NET DEBT: | 34% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2015 | 709 | 170 | 67.3 | 11 |
| 2016 | 882 | 83 | 25.7 | 11 |
| % change | +24 | -51 | -62 | - |
Ex-div: 1 Sep Payment: 30 Sep *Includes intangible assets of $1.76bn, or 733ȼ a share £1=$1.32 | ||||
