Management at Dechra Pharmaceuticals (DPH) cited a “resilient” full-year performance, notwithstanding Covid-19 disruption in recent months. That sentiment was borne out by the veterinary healthcare group’s preliminary figures, with operating profits climbing by a third. This, together with a cash conversion ratio of 99.4 per cent, underpinned an 8.5 per cent dividend hike – serving up a reminder of Dechra’s defensive qualities.
That said, on an underlying basis, profits were flat – tempered by a 1.5 percentage point margin contraction to 24.9 per cent. This reflected a pension-related credit in the prior year, higher research and development costs and the dilutive effect of acquisitions.
Even so, such acquisitions should enhance Dechra’s revenue streams. Two products from the group’s 2018 takeover of AST Farma and Le Vet were standout performers, helping to push its EU pharma net sales up by 6.4 per cent.
More recently, Dechra bought Ampharmco for £24.3m last August, in a bid to establish a base to make solid dose, liquids and creams for the American market. Meanwhile, Dechra also purchased Mirataz – the only drug for the management of weight-loss in cats approved by America’s and Europe’s medicine regulators – for £34.9m in April 2020. Post-period-end, it picked up Osurnia – a treatment for ear infections in dogs – for £105m.
Stifel forecasts adjusted EPS of 100p for FY2021, up from 92.2p in FY2020.
| DECHRA PHARMACEUTICALS (DPH) | ||||
| ORD PRICE: | 3,276p | MARKET VALUE: | £ 3.54bn | |
| TOUCH: | 3,270-3,278p | 12-MONTH HIGH: | 2,030p | LOW: 3,284p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 100 | |
| NET ASSET VALUE: | 590p* | NET DEBT: | 20% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 248 | 14.5 | 14.0 | 18.5 |
| 2017 | 359 | 28.6 | 28.1 | 21.4 |
| 2018 | 407 | 28.9 | 37.2 | 25.5 |
| 2019 | 482 | 27.8 | 30.2 | 31.6 |
| 2020 | 515 | 40.9 | 32.9 | 34.3 |
| % change | +7 | +47 | +9 | +9 |
| Ex-div: | 05 Nov | |||
| Payment: | 27 Nov | |||
| *Includes intangible assets of £692m, or 641p a share | ||||
