23rd Feb 2015 09:53
LONDON (Alliance News) - Veterinary pharmaceutical business Dechra Pharmaceuticals PLC Monday raised its interim dividend as it posted a rise in pretax profit for its first half.
Dechra proposed an interim dividend of 5.12 pence, up from 4.75 pence a year before.
In the half year to end December 2014, the company posted a pretax profit of GBP12.6 million, up from GBP10.3 million a year before, as revenue rose 5.2% to GBP100.9 million from GBP95.9 million. At constant currency, revenue would have been up 11%, Dechra said.
The company said that currency exchange-rate headwinds hit its performance as it has a significant portion of its operations overseas, and said that given the current economic and political climate in Europe, this will remain "an uncertainty for the rest of the financial year".
Revenue growth was boosted by a strong performance from Dechra's companion animal products and equine portfolio in Europe and the US, and improvement for its vetoryl treatment for Cushings syndrome in dogs. This helped to offset a decline in food producing animal products, which were hit by the continued decline of the use of antibiotics in the EU.
Revenue in the US rose 56%, boosted by new product launches and products being relaunched after long-term supply issues were resolved, and also by the acquisition of PSPC Inc last May. The company expects to up its investment in the US as it looks to increase its presence in the country.
The higher US revenue more than offset a 0.6% decline in revenue in Europe, damped by ongoing pressure on veterinarians to reduce antibiotic prescribing, which has particularly hit sales in Germany and the Netherlands.
Dechra's new Italian subsidiary, launched last March, is performing in line with expectations and its new Canadian subsidiary started trading in January. Further territories, including Poland, are being planned, Dechra said.
Selling, general and administrative costs were up to GBP39.6 million from GBP36.7 million, as Dechra focused on product launches and establishing new subsidiaries.
Dechra's tax rate for continuing operations declined to 20.2% for the half year, compared to 25.6% a year before, due to lower corporate tax rates in Denmark and the UK, and savings realised from its tax review as it utilises government-backed schemes such as the patent box in the UK.
"Despite the continued focus on reducing antibiotic prescribing in Europe and ongoing global financial uncertainty, the group is meeting its constant currency earnings expectations through the execution of its strategy," Dechra said in a statement. "Our core portfolio demonstrates growth, our product pipeline is delivering results and global expansion is progressing. Management remain confident that the group will continue to deliver value to shareholders."
Panmure Gordon analyst Savvas Neophytou reiterated his Buy rating for Dechra following the "excellent" first-half results, and raised the broker's price target to 1,140 pence from 950 pence. Panmure cites the lower tax charge and the US as driving growth. It has made a small upgrade to its earnings forecasts for Dechra, now expecting earnings per share for the full year of 39.6 pence, up from its previous expectation of 39.4 pence.
Shares in Dechra are trading up 1.3% at 921.08 pence Monday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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