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Consort Medical boosted by AstraZeneca tie-up

The drugs and device manufacturing company is attracting some of the big names in pharma
December 6, 2016

Consort Medical's (CRST) acquisition of drugs ingredient business Aesica has given it the capacity to provide the full spectrum of medicine and device manufacturing services for global pharma companies. This is an enviable position to be in considering the industry-wide trend of increased outsourcing. The group's heightened operational strength has drawn in two new customers in the year, including AstraZeneca (AZN) which - as a major global respiratory player - has "filled a glaring hole in our customer base", according to Consort chief executive Jon Glenn.

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Expansion outside of the respiratory field has also been strong, with non-respiratory products now making up more than a quarter of revenue in the original Bespak device manufacturing business. There are also plenty of non-respiratory products in the pipeline, so future growth here looks promising.

Aesica contributed £86m of revenue but, after stripping out a £6.5m foreign-exchange boost, this was only a 0.5 per cent increase year on year. But Bespak is still growing nicely, with revenue up 4.3 per cent to £58.9m. And improvement in Aesica's operational performance drove operating margins up 160 basis points to 7.8 per cent, which boosted group adjusted cash profit by 9 per cent.

Broker Panmure Gordon expects pre-tax profit of £32.3m for the year to April 2017, giving EPS of 53.5p (from £32.2m and 56.8p in FY2016).

 

CONSORT MEDICAL (CSRT)

ORD PRICE:1,050pMARKET VALUE:£517m
TOUCH:1,046-1,051p12-MONTHHIGH:1,175pLOW: 935p
DIVIDEND YIELD:1.9%PE RATIO:26
NET ASSET VALUE:429p*NET DEBT:51%

Half-yearto 31 OctTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201513614.112.26.75
201614516.620.17.09
% change+7+18+65+5

Ex-div: 19 Jan

Payment: 17 Feb

*Includes intangible assets of £197m, or 401p a share