The £91.2m divestment of its services segment last August swelled cash balances for veterinary drugs maker Dechra Pharmaceuticals (DPH). But the group's operating performance was hit by a disappointing performance in the Netherlands and continued supply issues in the US. Stripping out currency movements and one-off gains, operating profits grew by 9 per cent as higher margins offset a slight dip in sales.
The introduction of new guidelines on antibiotic prescriptions hit the Dutch business, but a resilient performance elsewhere in Europe and the integration of the Eurovet acquisition kept revenues in the region broadly flat at £86m. Adjusting for currency movements, the phasing of export orders and the Dutch problems, sales growth in Europe was 3 per cent.
A similar picture emerged in the much smaller US business, where revenues fell 2 per cent to £9.9m. Dermatological treatment Animax and the sterile ophthalmics range face ongoing supply problems, without which US revenues would have grown 13 per cent. Chief executive Ian Page said there was "no good reason" for the supply issues to drag beyond the current calendar year, but offered no further clarification. In the past, third-party suppliers have been blamed for production delays.
Broker Investec expects full-year pre-tax profits of £38.7m, giving EPS of 32.8p (from £33.5m and 29.1p in 2013).
DECHRA PHARMACEUTICALS (DPH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 685p | MARKET VALUE: | £598m | |
| TOUCH: | 683p-687p | 12-MONTH HIGH: | 792p | LOW: 656p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 78 | |
| NET ASSET VALUE: | 234p* | NET DEBT: | 5.1% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 91.9 | 5.8 | 5.01 | 4.34 |
| 2013 | 95.9 | 10.3 | 8.82 | 4.75 |
| % change | +4 | +78 | +76 | +9 |
Ex-div: 12 Mar Payment: 8 Apr *Includes intangible assets of £204m, or 234p a share | ||||
