Acquisitions fuel Dechra growth
PHARMACEUTICALS group Dechra has announced its fifth straight year of double digit underlying earnings growth and a 15% increase in pre-tax profit.
The group, which operates Dales Pharmaceuticals in Skipton, said its performance had benefited from two strategic acquisitions, which have now been fully integrated into the business. The group’s branded products have also continued to out-perform the market, while several new products add to the firm’s international reach.
Michael Redmond, group chairman, said: “Furthermore, we have continued to make advancements with our product development pipeline and have increased investment in people and infrastructure to ensure growth is sustained in the future.”
Revenue increased by 5.4% from £369.4m to £389.2m and underlying operating profit increased by 12.9% from £28.2m to £31.8m. The group said the increase in underlying operating margin from 7.6% to 8.2% was a reflection of the growth of its high margin pharmaceutical business, particularly in the United States.
Underlying net finance expense was £1.8m compared to £2.1m in 2010. Additional net foreign exchange gains of £0.8m were partially offset by interest on additional bank borrowings to finance the DermaPet®and Genitrix® acquisitions.
Underlying pre-tax profit increased by 15.4% from £26.1m to £30.1m while underlying earnings per share rose by 16.4% from 29.50p to 34.33p.
Reported operating profit was £21.7m (2010: £19.9 million) while pre-tax profit was £18.5m (2010: £17.7m).
The directors are recommending an increase in the final dividend to 8.40p per share (2010: 7.20p) and the board said this, together with the interim dividend of 3.70p per share made a total dividend for the year of 12.10p per share, a 15.2% increase.
Ian Page, chief executive, said the group was also confident of growth in the year ahead.
“We have continued to invest in our infrastructure and product development pipeline and have made two earnings enhancing acquisitions to ensure we are well positioned to maintain good future growth prospects,” he said.
In a note of caution, he said that while the markets in most of the countries in which the group trades had demonstrated growth, many had seen a decline in footfall through veterinary practices, especially in the companion animal sector.
However, he said this decline had been offset in the UK by reasonably strong growth in the livestock sector and by a significant increase in veterinary products being purchased online as price conscious consumers looked to reduce the costs of animal welfare.
Mr Page said Dechra’s UK distribution business was currently under represented in both these low margin sectors.
“Within these market dynamics and against the background of continued global economic uncertainty, Dechra has performed strongly and, for the fifth consecutive year, produced double digit underlying earnings per share growth. This success is a reflection of the strength of the group and the ongoing delivery of the underlying strategy,” he said.
