Dechra enjoys solid trading

PHARMACEUTICALS group Dechra has said trading in its veterinary products segment has continued to be robust as it reports solid first half revenues.

However, the group said the second half could be a tough period because of various factors – not just economic.

Dechra operates the Dales Pharmaceuticals business in Skipton.

It said in its half year results statement: “We remain cautious regarding the overall economic environment and are also conscious of the pressure on European veterinarians to self-regulate a reduction in antibiotic usage; we continue to monitor closely the situation.

“A solid first half performance in our Services segment will be offset by poor sales in January 2013 due to bad weather during which footfall through veterinary practices saw a significant decline.  This should not, however, detract from an overall recovery in this segment following a soft performance in the previous financial year.”

It added that the group continued to deliver its strategic objectives; with additional synergies from its Eurovet acquisition, new product introductions, improved efficiency and international expansion.

The group’s key strategic segments, European Pharmaceuticals and US Pharmaceuticals, have both shown good revenue growth from own licensed branded veterinary products and specialist pet diets.  Contract manufacturing has seen double digit revenue growth and its Services segment saw robust revenue growth and a modest improvement in operating margin over the corresponding period last year.

The H1 results show that in the six months to December 31, 2012 revenue increased by 20.4% to £252.2m (2011: £209.5m).  Underlying operating profit rose to £24.3m (2011: £16.2m), an increase of 50.1%.  Underlying pre-tax profit was up 46.9% (an increase of 54.2% at constant currency) to £21m (2011: £14.3m). Operating profit was £15.1m (2011: £11m).  Pre-tax profit was £11.5m (2011: £8.9m).

Underlying basic earnings per share was 18.03p (2011: 14.57p, adjusted for the bonus element of the Rights Issue). Basic earnings per share was 9.91p (2011: 9.27 p, adjusted for the bonus element of the Rights Issue).

The board has declared an interim dividend of 4.34p per share (2011: 3.77p, restated after being adjusted for the bonus element of the Rights Issue), an increase of 15.1%. The interim dividend is covered 4.1 times by underlying profit after taxation (2011: 3.9 times).

Cash generated from operating activities was £11.6m compared to the £1.4m achieved in 2011.  It said that in accordance with its normal cash flow cycle, it expected a strong cash inflow in the second half of the financial year.

During the period $16m (£10.1m) was paid in relation to deferred and contingent consideration under the terms of the DermaPet® acquisition, with a further $1.5m (£0.9m) paid in respect of an in-licence agreement in the US.