United prepares takeovers fund

HEALTHCARE services group United Drug is eyeing up acquisition opportunities in the US and could “comfortably” spend as much as €150 million per annum on takeovers over the next few years.

The Dublin-based drug wholesale and multi-disciplined healthcare services group yesterday reported pre-tax profits of €32.7m for the six months to the end of March, 4% ahead of the corresponding period last year. Operating profit was up 6% at €37m, earnings per share were up 2% at 10.90c and group revenue rose 5% to €893.6m.

The group saw a strong contribution from its US-based packaging business, while its homecare joint venture in Britain has also seen growth. Overall, the internationalisation of the company has led to more than 65% of total operating profits being generated outside of Ireland.

Group chief executive Liam FitzGerald said “considerable progress” had been made in internationalising the business. “This has been particularly important, in the period, as these increased contributions have more than offset the impact that the continued challenging regulatory climate has on revenues in some of our Irish businesses,” he added.

Gains in market share by United’s wholesale and pre-wholesale businesses here did, however, offset some impact of further regulatory changes in Ireland.

But, United Drug is still targeting 80% of profit contribution from its overseas operations by 2015. Its US operations accounted for more than 20% of first-half profits.

Mr FitzGerald said the group will continue to monitor its various markets for acquisition opportunities and, given its strong balance sheet, could “comfortably” spend up to €150m (it spent €100m on acquisitions last year) on a yearly basis over the coming few years. Any additions would, realistically, be made in the US, although the group is also keen on expanding its presence in Britain.

In terms of outlook, management said yesterday that: “despite recent additional regulatory changes in Ireland, the group still expects operating profit for the year to the end of September 2011 to be ahead of last year, on a constant currency basis.”

Meanwhile, United Drug also announced plans for a limited share buy-back programme of up to five million shares.