Fall in profits at United Drug

UNITED Drug chief executive Liam FitzGerald believes the company’s full-year financial performance will be in line with last year, even after reporting a 10% year-on-year drop in first half profits yesterday.

The Dublin-headquartered international drug wholesale and healthcare services group saw pre-tax profits slip to €16.9 million for the six months to the end of March.

Yesterday’s figures also showed a 4% year-on-year fall in operating profits for the period to €21.9m and a 12% slip in diluted earnings per share to 6.29c.

The interim dividend per share of 2.23c of last year remained unchanged and group revenue for the first half showed a 1% increase on the same period last year to hit €850.9m.

Mr FitzGerald said yesterday the company’s management remains confident of figures for the full year being in line with the previous year’s showing, adding that the second half of the year should show a better performance than the first half. For the year to the end of September, 2008, United Drug posted pre-tax profits of €58.5m.

Mr FitzGerald also said the company was nearing completion of its cost cutting programme, aimed at saving about €8m this year. This has included the consolidation of certain premises and facilities and the cutting of 200 jobs across the entire group, including 75 in its Irish operations. To date, around 70 of the Irish-based jobs have gone and 150 of the total redundancies have been achieved.

Mr FitzGerald added that no further job losses would be sought in the foreseeable future.

He did, however, add once again that the company is still on the look-out for further acquisition opportunities; with bolt-on acquisitions the preferred manner of boosting its homecare and contract sales and marketing divisions. In the short-term, any pending acquisition is likely to be made in the British market, with a longer-term eye on buying companies in the US.

He said that the company’s balance sheet is strong enough to support its growth objectives and that management “remains positive about the fundamentals of its core markets and its position within those markets”, despite the current challenging economic environment.

While United and Davy Stockbrokers – the company’s main broker – maintained their full-year forecasts to remain unchanged, Goodbody Stockbrokers slightly lowered its expectations – narrowing its pre-tax profit forecasts from €56.6m to €55m and its earnings per share forecasts, for the company, from 24.4c to 23.8c.