17th Feb 2009 07:00
UNITED DRUG PLC
INTERIM MANAGEMENT STATEMENT
UDG.I UDG.L
Dublin, London, 17 February 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) in compliance with the EU's Transparency Directive, in advance of its Annual General Meeting which is being held today at 12.00 noon in Dublin. This IMS covers the three month period from 1 October 2008 to 31 December 2008, representing the first quarter of the Group's 2009 financial year.
At the end of the 2008 financial year, United Drug announced plans to streamline its operating structure into three new divisions; the Healthcare Supply Chain, Packaging & Speciality and Contract Sales & Marketing Services divisions. On 22 January 2009, the Group announced a restructuring programme designed to implement this changed divisional structure and to review the cost base across all parts of the business. This review is expected to result in a once-off exceptional restructuring cost this year, in the region of €10 million, deliver annualised savings of €7-8 million and leave the Group well positioned for growth in future years.
Three months ended 31 December 2008
The sharp decline in the economies in which United Drug operates has had a number of impacts on the business, during the quarter, resulting in challenging trading conditions in several parts of the Group but increased opportunities in other parts of the Group.
In the Healthcare Supply Chain division those parts of the business dependant upon discretionary spending for premium cosmetics and consumer goods have seen a significant fall off in such spending. There is a strong pipeline of new business opportunities in all of the manufacturer facing businesses, however a further curtailment of hospital spending on capital equipment continues to impact revenues in the medical & scientific business. In the Packaging & Speciality division there has been some delay in the release of packaging orders, particularly in the US market, and lower volumes from one key client in the UK as customers struggle with lower visibility on their own revenue streams. In Contract Sales and Marketing Services the strong momentum generated in recent years has continued with a significant number of new contract wins in all parts of the business as clients increase their level of outsourcing to gain more flexibility in their sales models.
In the preliminary announcement of results for the year ended 30 September 2008 the Group noted that a continued weakening of sterling relative to the euro could impact on 2009 reported results. The final three months of the 2008 calendar year has seen a further significant fall in the value of sterling. This fall in the value of sterling reduces sterling profits when translated to euro for reporting purposes and if the value of sterling remains at or near current levels, or falls further, it will impact upon reported numbers for the 2009 fiscal year.
During the quarter, the Group has continued its expansion as an international healthcare services company with the acquisition of The Specials Laboratory (TSL), a leading manufacturer of unlicensed medicines, known as "specials", for the retail pharmaceutical and hospital markets in the UK. The acquisition enhances United Drug's position in the growing specials market in the UK and provides the Group with high quality manufacturing capability. TSL will be integrated into the Healthcare Supply Chain division and reflects the Group's continued drive to develop higher value added, higher margin services.
Outlook
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.
Based on current trading and the weakness of sterling the Group expects results for the first half of the financial year to be down, compared with a strong first half of 2008. There is currently a lack of visibility on revenues in various parts of the business, however, the Group is working to achieve a profit for the year at least in line with the prior year, on a constant currency basis.
2009 Reporting Timetable
The Group will issue a trading update for the half year to 31 March 2009 on Friday, 3 April 2009 and results for the period will be issued on Wednesday, 6 May 2009.
ENDS Tuesday, 17 February 2009
For reference:
Liam FitzGerald Pauline McAlester
United Drug plc Murray Consultants
Tel: +353-1-4598877 Tel: +353-1-4980300
Investors and Analysts
Mark Kenny/Jonathan Neilan
K Capital Source
Tel: +353-1-6315500
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 Group (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, The Netherlands 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.
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