UDG Healthcare (UDG) already appears to be benefiting from new drugs serialisation and container laws due to come into effect in 2017. The company supplies drugs packaging services via its Sharp division, which saw operating profit ramp up 38 per cent in the first half. This was thanks to the stellar performance by the US segment, which is "really flying" according to chief financial officer Alan Ralph. Sharp's EU business is still dragging a little on profitability, having once again made an operating loss of €0.3m (£0.23m), but according to Mr Ralph this is a highly fragmented market which UDG is increasing its presence in - it may take time.
The Ashfield commercial and medical services business - which contributed 62 per cent of revenue - also made good progress in the period, with sales up across all geographies. This business is likely to benefit from the recently announced acquisition of Pegasus, a healthcare communications company, which will help to boost the drugs marketing services UDG offers to large pharmaceutical companies.
Acquisitions are likely to play a greater role in UDG's business since the sale of United Drug Supply Chain Services*, United Drug Sangers, TCP Group and MASTA, completed after the period-end. These disposals have pushed the group into a net cash position, according to management.
Broker Numis expects full-year adjusted pre-tax profits of €92.5m and EPS at 29.9ȼ, up from €85.5m and 27.4ȼ in 2015.
*23 May 2016: The original version of this article referred to the disposals of United Drug, Ashfield KK and Pharmaceutical Trade Services. The latter two were older transactions. The article has been corrected.
UDG HEALTHCARE (UDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 595.5p | MARKET VALUE: | £1.47bn | |
| TOUCH: | 595-596p | 12-MONTH HIGH / LOW: | 630p | 452p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 35 | |
| NET ASSET VALUE: | 239ȼ* | NET DEBT: | 39% | |
| Half-year to 31 Mar | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2015 | 446 | 17.6 | 4.98 | 2.90 |
| 2016 | 472 | 33.1 | 9.92 | 3.05 |
| % change | +6 | +88 | +99 | +5 |
Ex-div: 26 May Payment: 20 Jun *Includes intangible assets of €436m, or 177ȼ a share £1=€1.30 | ||||
