United Drug confident of boosting overseas profit

DIVERSIFIED Irish healthcare services group, United Drug is confident of boosting its overseas profit contribution to 80% over the next three years.

The Dublin-headquartered company, whose domestic business mainly concerns its core drug wholesale activity, told shareholders at its annual general meeting yesterday that group profits and revenues for its first quarter (the three months to the end of December) are ahead of last year and ahead of initial expectations.

Currently, 60% of UD’s group profits are generated outside of Ireland.

“The group has made a very good start to the new financial year, with all divisions trading well and particularly strong growth in our US businesses,” group chairman Ronnie Kells told shareholders at yesterday’s meeting in Dublin’s Shelbourne Hotel.

Mr Kells added that the group has strong cash-flows and low levels of debt and that “based on trading for the year-to-date”, the outlook for the remainder of the financial year (the group’s fiscal year runs to the end of September) is upbeat with earnings per share set to be ahead of the previous year.

United reported earnings per share of 18.67c (a decline of 3%) for the 12 months to the end of September 2010.

Management added that despite a period of stagnant profit growth, the group is still very much growth-orientated with future progress likely to come from both organic growth and further bolt-on acquisitions. In the last six months, alone, UD has spent €35m on various acquisitions and said that its current financial strength can support additional buys. Any movement in this regard is likely to come about through bolstering its contract sales and marketing and packaging businesses in the US and speciality medicines and packaging divisions in mainland Europe and the UK.

Chief executive, Liam FitzGerald, also said that UD’s UK-based homecare joint venture with US company Medco Health Solutions has the ability to obtain a 50% share of the market inside the next five years.