The defensiveness of United Drug's medicines distribution business was confirmed by these results - the group grew distribution sales by 1 per cent to €730m (£589m) in the period, despite a 4 per cent decline in the value of the group's wider Irish medicines distribution market. But while United's Irish market remains problematic, management's strategy of expanding into the US is starting to bear fruit - that's potentially a long-term catalyst for the share price.
The effects of this US shift was most obvious in the specialist packaging arm. Sales there rose 14 per cent to €78m as big pharmaceutical companies continued to outsource many of their peripheral operations - crucially, in United's targeted US market - although that was offset somewhat by a 15 per cent fall in revenues at the marketing and services division to €86m, mainly due to the effect of an accounting change for pass-through costs. However, when that's stripped out, divisional sales actually rose by 3 per cent on a like-for-like basis. Chief executive Liam Fitzgerald said the company was sticking to its previous guidance of EPS growth of between 4 and 8 per cent for the year.
Broker Goodbody said that management's reaffirmed EPS guidance supported its own full-year estimate of 24¢.
UNITED DRUG (UDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 190p | MARKET VALUE: | £456m | |
| TOUCH: | 187-194p | 12-MONTH HIGH: | 220p | LOW: 155p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 165¢* | NET DEBT: | 31% | |
| Half-year to 31 Mar | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 894 | 24.9 | 8.48 | 2.41 |
| 2012 | 894 | 28.1 | 9.65 | 2.48 |
| % change | - | +13 | +14 | +3 |
Ex-div: 16 May Payment: 13 Jul *Includes intangible assets of €264m, or 110¢ a share £1=€1.24 | ||||
