UDG to invest €24m in US packaging plants

New plant in Pennsylvania will add 40% to drug distributor’s capacity

Drug distributor UDG Healthcare plans to spend €24 million on boosting the capacity of its US packaging plants between now and mid-2016 to meet growing demand in the market.

The group said yesterday that its businesses generated pretax profits for the 12 months ended September 30th of €71 million, 11 per cent more than the €63.6 million it earned in 2013. Sales increased 6 per cent to €2.12 billion from €2 billion last year.

Continued growth

According to chief executive,

Liam Fitzgerald

, UDG is planning to invest $30 million (€23.9 million) in its subsidiary

Sharp

Packaging Services’s facility in Allentown,

Pennsylvania

in the northeastern US.

Mr Fitzgerald said the new plant, which is due to begin production in mid-2016, would add 40 per cent to the existing plant’s capacity. “The investment is needed to allow us to continue growing in the US,” he said.

The first phase of a plan to expand its US capacity was completed earlier this year. The group’s results statement said that it would have invested a total of €35 million when the second stage is finished in 2016.

UDG’s overall US business grew by 34 per cent during the group’s 2014 financial year and is likely to grow by 40 per cent. Sharp’s US profits were 8 per cent ahead of 2013 and increased by 50 per cent in the second half of the 12-month period.

The group’s net debt at the end of September was €246 million, which was 1.89 times earnings. Its agreements with its banks allow it to increase this ratio to 3.5.

In September, it concluded a new deal with lenders allowing it to draw down up to €210 million. By the end of the month it had taken up €125.8 million of this facility.

Mr Fitzgerald said its financial position gave it the scope to seek further acquisitions to add to purchase of Knowledgepoint 360 (KP360) for €106 million and Galliard for €16 million that it completed during the 2014 financial year.

He said that the group was looking for further deals. “We have a very active pipeline,” Mr Fitzgerald said. “But it is unlikely that we will do something on the scale of KP360.”

Increase in profit

Both Knowledgepoint and Galliard became part of UDG’s Ashfield commercial and medical services division. That element of the group delivered a 32 per cent increase in operating profit to €43.3 million from €32.7 million, revenues were up 27 per cent at €496.7 million from €390.5 million.

Operating profit at its supply chain services fell 13 per cent to €40.2 million from €46.1 million, while revenues were down 2 per cent at €1.45 billion from €1.47 billion.