United Drug earnings grow for 20th straight year

UNITED Drug capped 20 years of successive earnings growth yesterday with a 16% rise in full-year profits to almost €50 million.

The company said its four divisions all had a good year with profits ahead in all areas as turnover rose 6% to €1.32 billion in the year to end September.

Chief executive Liam FitzGerald said turnover growth was slower than the increase in profits because of a cut in prices at its North-based wholesale drug distribution business, which supplies pharmacies across Ireland.

But earnings still managed to grow in double digits for the 20th year running. Profits were helped along by a €9m gain on the sale of property.

He said it was too early to predict the outcome of talks on pricing in the Republic, which have not moved in some years, and the impact on United Drug.

But he was upbeat about the prospects for its wholesale arm. He said an ageing and expanding population as well as the introduction doctor-only medical cards would drive growth in the coming years.

The company’s other divisions, which focus on the sale and supply of medical equipment, were buoyed by a acquisitions during the year and a number of contract wins.

Shareholders in United Drug will receive a dividend of 5.5 cent per share, 15% higher than a year ago.

The dividend will be paid out of earnings per share of 18.13 cent.

Mr FitzGerald added that United Drug was hopeful that the proposed merger of Boots and Alliance Unichem would lead to further deals between the companies.

Shares in United Drug, which have declined 18% in recent months, gained as much as 6% yesterday following the results. The shares closed up 13 cent at €3.30.

In a research note yesterday, Davy Stockbrokers said: “United Drug delivered a strong set of [full-year] figures, modestly exceeding expectations and prompting a 1-2% forecasts upgrade. The results highlight continuing growth momentum, allied to the finances required for further acquisitions.

“Whilst the Irish pricing review remains an overhang, its impact is likely to be limited and we feel that the 18% [share price] decline from 2005 highs is overdone.”