Management at animal pharmaceuticals and veterinary drugs company Dechra Pharmaceuticals had a very busy spring and summer overseeing takeover activity totalling £117m, funded by both debt and new shares. Investors might have to wait until the 2013-14 financial year before the acquisition of Dutch company Eurovet starts to materially boost EPS, but the impact on the company's rating has been instant, with the share price close to a 12-month high.
Dechra delivered solid first-half results despite facing currency headwinds as strong pharmaceutical sales in Europe and the US offset pressure on margins in the company's wholesaling business and helped raise underlying operating profits by 15 per cent to £36.6m. The US business reported sales 26 per cent higher at £20.4m, with equine medicine Vetoryl finally starting to gain traction as the company learned to cope with competition from generic products. Likewise, European pharmaceuticals benefited from better in-house marketing of Vetoryl and sales rose 18 per cent to £105m. However, a lack of exposure to online pharmacies meant the 6.5 per cent reported sales growth from Dechra's wholesale veterinary services division lagged behind the market.
Broker Investec Securities forecasts current year pre-tax profits of £46.7m and EPS of 40.8p (from £33m and 32.3p in 2012), rising to £53.7m and 46.9p in 2013-14.
DECHRA PHARMACEUTICALS (DPH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 503p | MARKET VALUE: | £437m | |
| TOUCH: | 500-506p | 12-MONTH HIGH: | 525p | LOW: 389p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 177p* | NET DEBT: | 56% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)** | Dividend per share (p)** |
|---|---|---|---|---|
| 2008 | 304 | 11.7 | 13.0 | 7.6 |
| 2009 | 350 | 16.1 | 15.9 | 8.1 |
| 2010 | 369 | 17.7 | 18.4 | 9.6 |
| 2011 | 389 | 18.5 | 19.5 | 11.1 |
| 2012 | 426 | 16.8 | 15.6 | 12.2 |
| % change | +10 | -9 | -20 | +10 |
Ex-div: 7 Nov Payment: 23 Nov *Includes intangible assets of £226m, or 260p a share **Restated for effect of rights issue in April 2011. Adjustment factor of 0.919 | ||||
