While currency headwinds are somewhat accountable for Hikma Pharmaceuticals ' (HIK) struggles this year, it was the poor performance of the non-branded division that really hit revenue and profits. Non-branded sales fell 30 per cent in the period, with the gross margin here down 11 percentage points.
Market conditions for this division, which operates solely in the US, have worsened in the year as competition has risen. In an attempt to bolster sales, Hikma has agreed the acquisition of Roxane Pharmaceuticals, but with the target group also conceding to competition during the year, it is likely the deal won't be as accretive as Hikma first hoped.
Sales in injectables - the group's largest division - were flat after currency changes, but core operating profit was up 18 per cent due to a reduction in research and development expenses. The one ray of light in an otherwise pretty dismal sales performance came from the branded division, where revenue was up in spite of adverse currency movements in the core Middle East and North Africa region. With 54 new products launched in the year, and 139 new regulatory approvals, prospects look good here.
Broker Stifel expects adjusted EPS of 133ȼ next year, down from 144ȼ in 2015.
HIKMA PHARMACEUTICALS (HIK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,620p | MARKET VALUE: | £3.88bn | |
| TOUCH: | 1619-1621p | 12-MONTH HIGH: | 2,520p | LOW: 1,575p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 558ȼ* | NET DEBT | 11% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2011 | 0.92 | 94 | 41 | 13 |
| 2012 | 1.11 | 132 | 51 | 16 |
| 2013 | 1.37 | 298 | 108 | 20 |
| 2014 | 1.49 | 362 | 140 | 32 |
| 2015 | 1.44 | 318 | 127 | 32 |
| % change | -3 | -12 | -10 | - |
Ex-div: 7 Apr Payment: 19 May *Includes intangible assets of $607m, or 254ȼ a share £1=$1.41 | ||||
