United Drug profits rise 24% on the back of market gains

UNITED Drug has reported a 24% rise in full year pre-tax profits, driven by market share gain across its four operating divisions.

The company said pre-tax profits in the year to September were €35 million, up from €28.3m in 2002, with strong contributions from its pharmaceutical, wholesale and contract distribution outsourcing arms.

Chief executive Liam Fitzgerald said an acquisition made during the year, Mantis Surgical, and a recent takeover had also lifted earnings.

Turnover for the year was ahead by 16% at €1.12 billion.

It did not break down sales from its four operating units: pharmacy wholesale, contract distribution, sales outsourcing and medical supplies, but the company said they had seen an increase in sales and profits.

United Drug raised its dividend by 15% to 4.11 cents, while earnings per share increased by 17% to 13.35 cents. The company took a one-time charge of €1.14 million to cover the cost of redundancies at Ventic, a British company it acquired in October 2002.

Mr Fitzgerald said the outlook for the Irish pharmacy wholesale division was positive given the “rapid ageing” of the Irish population and the “benign” government policy in relation to drug refund payments.

But he added: “There has been no increase in the price of medicines in the past 12 months, so our 24% increase in profit is not in anyway influenced by the price of medicines.”

Mr Fitzgerald estimates that United Drug has around 40% of the whole pharmacy market and will look to further gains, but will not expand into the retail pharmacy sector. The company’s rivals, like Celesio (formerly Gehe) are both wholesalers and retailers of medicines.

United Drug will also look to increase its presence in Britain, where it earns around 40% of its profits, particularly in the contract sales and distribution business.

Mr Fitzgerald said the company would seek bolt-on acquisitions as it had in previous years, but had not set a spending target for 2004.

Brokers reacted positively to the results and United Drug shares closed down 1.2% yesterday at €2.35. They have risen by around 30% this year.