Profits up at United Drug but Irish arm stagnant

HEALTHCARE SERVICES group United Drug saw its pretax profits increase by 4 per cent in the first half of the year, as its international business helped offset a relatively flat Irish performance.

The firm reported pretax profits of € 32.7 million in the six months to March 31st, based on revenues of €894 million, an increase of 5 per cent on the same period in 2010.

Revenues were boosted by a weakening of the euro relative to sterling and the US dollar. Operating profit was up by 6 per cent to €37 million, while the firm’s fully diluted earnings per share was 2 per cent ahead of 2010 at 10.90 cent per share.

An interim dividend of 2.41 cent per share was declared, an increase of 3 per cent on 2010.

The company’s Irish performance was relatively stagnant, with revenues up by just 1.3 per cent, to €570 million.

According to Liam FitzGerald, chief executive officer of United Drug, the company was “collateral damage” of the Governments policy to impose price and margin cuts in the sector.

However, the firm’s total international business, which contributed over 65 per cent of profits, helped to offset this slowdown.

“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,” said Mr FitzGerald.

In the US, revenues increased by 17 per cent to € 65 million, and its overall US business accounted for more than 20 per cent of its operating profit. According to Mr FitzGerald, this is set to grow further.

“Strategically, we’d like at least a third of profits coming out of the US,” he said, adding that this would be achieved both organically and through acquisitions, particularly in the high growth clinical trials packaging sector. United Drug will also look to acquisitions in the UK market. Looking ahead, Mr FitzGerald expects new business wins will boost revenues in 2012 and beyond.

The company announced that from May 24th, it will look to buy back five million of its own shares.