Branded and generic medicines company Hikma Pharmaceuticals has returned to growth in some of its key Middle Eastern and North Africa (MENA) markets after the disruption caused by the Arab Spring. The improvement meant like-for-like group sales grew by 7.6 per cent and helped maintain adjusted operating profits at $146m (£93m).
Branded pharmaceuticals was the segment most exposed to ructions in the Middle East, so for this business to grow underlying sales by 9.6 per cent was quite some achievement. However, higher inflation in the MENA region, lower prices for locally produced medicines and increased raw materials costs combined to keep operating profits flat at $98.5m.
Times were even tougher at Hikma's generics division, which had to contend with the discontinuation of gout medicine colchicine, cost pressures in the US and a lack of product launches. When combined, this led to a 67 per cent fall in operating profit to $17.1m. However, the shortfall was made up by the injectables business, which was boosted by the acquisition of MSI last May and established Hikma as the second-largest supplier in the US. This added $120m to revenues, but on an underlying basis turnover was still up 23.3 per cent with a notable improvement in margins.
Broker Peel Hunt may cut its EPS estimate of 60.7¢ by 5 per cent due to a higher tax charge (51¢ in 2011).
HIKMA PHARMACEUTICALS (HIK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 773p | MARKET VALUE: | £1.5bn | |
| TOUCH: | 772-773p | 12-MONTH HIGH: | 878p | LOW: 536p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 396¢* | NET DEBT: | 53% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2007 | 449 | 84.0 | 37.0 | 7.5 |
| 2008 | 581 | 64.0 | 30.4 | 7.5 |
| 2009 | 636 | 95.0 | 40.9 | 11.0 |
| 2010 | 730 | 121.0 | 51.4 | 13.0 |
| 2011 | 918 | 93.9 | 41.3 | 13.0 |
| % change | +26 | -22 | -20 | – |
Ex-div: 18 Apr Payment: 24 May *Includes intangible assets of $409m, or 209¢ a share £1=$1.57 | ||||
