United Drug beats expectations with 15% increase in pretax profits

Drug wholesaler and distributor United Drug has reported a 15 per cent increase in pretax profits.

The company's four divisions all performed well, contributing to the group's €22.34 million of pretax profits in the six months ended March. Sales rose 3 per cent to €634 million.

The results, which were ahead of forecasts, were welcomed by Davy Stockbrokers, who said it expects United to continue growing with the help of acquisitions.

Chief executive Liam FitzGerald confirmed United is actively looking for acquisitions and said the group is particularly keen to expand its medical and surgical outsourcing business in the UK. He said the market can expect to see some sort of acquisition within the next 12 to 18 months if not sooner.

Mr FitzGerald forecast earnings growth in the "mid teens and beyond" for the second half of this year and said that will remain the company's target going forward.

Founded in 1948 by a group of chemists, United Drug has increased its share of the wholesale market, helped by its status as the only Irish drugs wholesaler not to also own pharmacies.

Revenue and profitability at the wholesale division increased in the six months in what the company described as a competitive marketplace in the Republic.

In the North, new customer gains at the start of the year at its Sangers unit were offset by a 7 per cent decline in the price of ethical pharmaceuticals. Still, good margin management and cost control had enabled the division to increase revenue, according to Mr FitzGerald.

United this year opened its new Magna Park II distribution facility, which will house the group's contract distribution business and medical and scientific division in the Republic.

The site, whose opening had been delayed, will be fully operational by the end of this month. It is about twice the size of the group's former premises and gives significant capacity for further growth in the coming years, said Mr FitzGerald. The company also said its medical and scientific arm had continued to deliver strong growth in sales and profits in the period, despite the upheaval of integrating the unit's divisions into the new Magna Park II facility.

The UK business also performed well.

Elsewhere in the outsourced sales business, the company reported new business wins in the UK, where it has added more staff and services.

Following the release of United's interim results, Davy raised its full-year forecasts. United's shares slipped 4.1 per cent to €3.5.

United raised its interim dividend 14 per cent, to 1.5 cents a share.