Vet products group confident of future growth prospects

Revenues and pre-tax profits at veterinary products group Dechra Pharmaceuticals have soared during the year to June 30.

The group, which is based in Northwich, Cheshire, and has a manufacturing site in Skipton, North Yorkshire, reported turnover of £515.1m, compared with £481.8m the previous year, while pre-tax profits of £40.9m was an improvement on the £27.8m figure in 2019.

A dividend of 34.29p per share is up on the 31.60p level last year.

The group, which was given clearance by the Competition and Markets Authority for its £102.4m acquisition of the Osurnia business of Elanco Animal Health Incorporated in July, said it enjoyed a strong financial performance during the year.

Revenues grew by 6.8% while it reported strong cash generation, with cash conversion of 99.4%.

The European market saw net revenues rise by 7.8%, at constant exchange rates, driven across all its key therapeutic sectors, due to veterinary educational programmes on its existing portfolio and the continued delivery of synergies from the AST Farma and Le Vet acquisition completed in February 2018.

Performance by country is varied with the COVID-19 effect being particularly prevalent in the UK and France, both of which have underperformed.

The UK was subject to more practice closures than any other country and also appears to have been affected by wholesalers reducing Brexit contingency stock.

It started to show signs of recovery in June and returned to near normal in July. Performance in France showed a marked improvement in June. All other territories performed well in this difficult COVID-19 affected environment.

The group’s international expansion strategy continues to deliver growth, especially in Australia, New Zealand and Brazil where it has its own Dechra-branded organisations.

Its North America pharmaceuticals segment saw net revenues increase by 5.1% at constant exchange rates, with the group saying this is an excellent second half performance given the decline seen in the first half due to supply issues and a strong comparable period in the previous year.

Performance in Mexico continues to improve, while the performance in Canada remains solid.

Chief executive Ian Page said: “Trading in the first few weeks of the new financial year has been encouraging.

“However, the underlying COVID-19 affected longer term trend cannot yet be ascertained as there is a degree of correction in current sales as markets, such as the UK, return to growth and wholesaler stocks return to more normalised levels.

“The indications at this stage, however, are positive.

“A key area of focus over the coming months will be the sales and marketing of our recently acquired brands, Osurnia and Mirataz, which offer solid growth prospects and strengthen our portfolio.”

He added: “We believe in the capability of our people and our ability to execute our strategy and therefore remain confident in our future growth prospects.”