A difficult year for Hikma Pharmaceuticals (HIK) has culminated in a mixed set of financial results. At the top line things are going well, marked by a 39 per cent constant currency revenue increase. But a higher contribution from lower-margin business in the branded and generic (non-branded) drugs divisions, a $16m (£13m) intangible asset write-down and $33m of one-off charges related to the acquisition of West-Ward Columbus sent reported operating profit down 9 per cent at constant currency.
After several months of disappointments relating to that acquisition, investors were no doubt relieved to hear that integration is now on track with cost savings of $35m made in the period. The 10-month contribution from the business helped send generic revenues up 300 per cent to $604m, and management expects that to rise to $800m in 2017.
A 2 per cent to 6 per cent forecast revenue increase from the injectables business is less impressive, but the group has a strong new drugs pipeline - propped up by a generic version of GlaxoSmithKline's (GSK) best-selling asthma drug, Advair.
Broker Peel Hunt is therefore confident about the year to December 2017 and expects pre-tax profits and EPS at $394m and 125ȼ, respectively (from $305m and 97ȼ in FY2016).
HIKMA PHARMACEUTICALS (HIK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,126p | MARKET VALUE: | £5.10bn | |
| TOUCH: | 2,115-2,084p | 12-MONTHHIGH: | 2,703p | LOW: 1,575p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 39 | |
| NET ASSET VALUE: | 998ȼ* | NET DEBT: | 29% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2012 | 1.11 | 132 | 51 | 16.0 |
| 2013 | 1.37 | 298 | 108 | 20.0 |
| 2014 | 1.49 | 362 | 140 | 32.0 |
| 2015 | 1.44 | 318 | 127 | 32.0 |
| 2016 | 1.95 | 210 | 67 | 33.0 |
| % change | +35 | -34 | -47 | +3 |
Ex-div: 6 Apr Payment: 25 May *Includes intangible asset of $1.7bn, or 716ȼ a share £1=$1.22 | ||||
