Pretax profits at service provider UDG Healthcare increased by 17 per cent driven by a “combination of underlying and acquisition growth”.
In its full-year results to the end of September, the Dublin-headquartered company adjusted pretax profit stood at $118.9 million (€100 million) in a year the group completed six acquisitions with capital commitments in excess of $270 million. These acquisitions, according to chief executive Brendan McAtamney, will enhance and broaden the company’s capabilities.
“We are well positioned to continue to deliver organic growth and our strong balance sheet will enable us to execute further strategic acquisition opportunities as they arise,” he said.
London-listed UDG, which operates across three divisions known as Ashfield, Sharp and Aquilant, employs over 9,000 people across its operations in 24 countries.
Its Ashfield division was particularly successful, recording a 16 per cent increase in operating profit, while operating profit at the the Sharp division was up 8 per cent – helped by Sharp Europe’s move into profit. In the Aquilant division, adverse currency translation movements led actual operating profit to decrease by 7 per cent on the previous year. However, Mr McAtamney said he wasn’t concerned by Aquilant’s performance, noting that it isn’t a “core focus” of the company.
Stockbroker Davy told clients that UDG exits 2017 in “excellent shape”.
"We reiterate our 'outperform' rating and move our price target to £10.00," analysts Andrew Young and Allan Smylie wrote in a note. They also said that UDG's balance sheet capacity leaves the door open for further mergers and acquisitions.
Commenting on potential future targets, Mr McAtamney said the greatest space for expansion was in its Ashfield group with communications in the healthcare space still being “very fragmented”. He said the group as considerable fire power and has just $53 million of debt.
As to whether the company can continue on this profitable position, Mr McAtamney said he expected Ashfield to grow by between 5 and 10 per cent, while the Sharp division should grow by double digits, he said.
The company reported that its organic growth, or non-acquisition related growth, is expected to “accelerate” during the second half of next year.
As a result of healthy performance, UDG upped its proposed final dividend by 7.5 per cent to $9.72 per share.