31st Jul 2009 07:00
UNITED DRUG PLC
INTERIM MANAGEMENT STATEMENT
Dublin, London, 31 July 2009: United Drug plc ("United Drug" or "the Group"), a leading international provider of services to healthcare manufacturers and pharmaceutical retailers today issues the following Interim Management Statement (IMS) for the period from 1 April 2009 to the date of this announcement.
Earlier in the year the Group announced a restructuring programme to implement a new divisional structure and to provide a more efficient and cost effective service to clients. The restructuring has progressed well, additional efficiencies and cost savings have been identified, and the Group now expects to achieve annualised savings of €9 - 10 million. The once-off restructuring cost to be incurred this year is now expected to be in the region of €14 million.
Quarter to 30 June 2009
Overall trading in the quarter to 30 June 2009, the third quarter of the financial year, was in line with expectations as stated in the Trading Update released in April. Parts of the Group continue to experience difficult trading conditions, against a backdrop of reduced consumer spending on discretionary items and lower levels of spending on hospital equipment, while other parts of the Group are benefiting from an increased trend towards outsourcing of non-core functions by healthcare manufacturers.
In the Healthcare Supply Chain division the wholesale, pharmaceutical pre-wholesale and specials businesses, are performing very solidly in all markets. These businesses are trading in-line with or ahead of last year, in local currency. The division's consumer products distribution business in Ireland continues to trade below last years levels on reduced consumer spending and the Medical & Scientific business is also trading below the prior year on lower capital spending in hospitals both in the UK and Ireland.
In the Packaging & Speciality division there has been a good improvement in activity levels in the US business, as some of the orders held back earlier in the year have now been released. Trading in the European businesses remains steady although the UK business is operating on lower volumes than last year following reduced orders from one major client as announced earlier this year.
In Contract Sales and Marketing Services the momentum generated in the first half of the year has continued with further contract wins in all parts of the business as clients increase their level of outsourcing. This division is trading well ahead of the prior year.
The management of working capital continues to be a major priority throughout the Group and cash flow performance year to date is better than our forecasts.
Outlook
Based on current trading the Group expects profits (before exceptional costs) for the year to 30 September 2009 at least in line with the prior year, on a constant currency basis. However, approximately 45% of Group profits for the year-to-date have been generated in sterling which has fallen in value by over 16% relative to the euro in the nine months to 30 June 2009. This fall in the value of sterling reduces sterling profits when translated to euro for reporting purposes and is expected to result in reported profits for the year to 30 September 2009 being below the profits reported in the prior year.
United Drug remains positive about the fundamentals of its core markets and its position within those markets despite the current extremely challenging economic environment. The Group continues to explore opportunities to expand its business, both organically and through acquisition, and has a strong balance sheet to support its growth objectives.
2009 Reporting Timetable
The Group will issue a trading update for the year to 30 September, 2009 on Wednesday 7 October, 2009 and results for the year will be issued on Wednesday 18 November, 2009.
ENDS
For reference:
Liam FitzGerald Pauline McAlester
Barry Mc Grane
United Drug plc Murray Consultants
Tel: +353-1-4632300 Tel: +353-1-4980300
About United Drug plc
United Drug is a leading international provider of services to healthcare manufacturers and pharmaceutical retailers, with operations in the UK, Ireland, Holland, Belgium and the USA. The Company has a long-term track record of delivering double-digit profit, earnings and dividend growth. Over the last 20 years pre-tax profits have grown at a compound annual rate of 21%.
The Company operates across three divisions, Healthcare Supply Chain, Packaging & Speciality and Contract Sales & Marketing Services.
United Drug is the largest pharmaceutical wholesaler on the island of Ireland.
It is the market leader in contract distribution outsourcing (pre-wholesaling) in Ireland and has achieved the No. 1 position in the UK through its joint venture business UniDrug Distribution (UDG). The Company also provides sales & marketing and technical service solutions, including contract distribution services to medical equipment and devices manufacturers, with a market leading position in Ireland and an emerging presence in the UK.
Through its Packaging & Speciality division the Company provides distribution related services in the areas of pharmaceutical contract packaging and speciality distribution in the US, UK, Holland and Belgium.
United Drug is also a leading provider of contract sales outsourcing and related marketing services to pharmaceutical manufacturers in the UK and Ireland and also provides these services in the US market.
Related Shares:
UDG.L