United Drug lifts annual profits by 33% to £9.7m

United Drug, the pharmaceutical distribution company, is seeking further strong growth following the 33 per cent rise in profit before tax and exceptional charges to £9.7 million in the year to September 30th 1998.

Further benefits are expected to flow from the rationalisation of Dublin Drug which was acquired last year. UniDrug, the British distributor has gone into profits and has secured a valuable contract and the overall market is very buoyant, said chief executive, Mr Jerry Liston. Sales are up 20 per cent in the first two months while profits have grown by 25 per cent in October. However, he said growth will be at a lower rate than last year.

The latest results had the benefit of a full contribution from Dublin Drug. But it also had to contend with rationalisation costs of £989,000 which reduced the growth at the pre-tax level to 19 per cent. Nevertheless, the group enjoyed strong underlying growth. Also, the results are somewhat better than some brokers' predictions.

Shareholders are to benefit. A final dividend of 7.7p per share has been declared, making a total of 11.0p, representing an 11 per cent increase on the previous year. This is below the 30 per cent rise in fully diluted earnings per share (before exceptionals) from 22.30p to 29.03p.

Asked about the disparity in the growth levels, Mr Liston said the group has a policy of consistent improvements in dividend payments.

The latest results show a 35 per cent rise in sales from £302 million to £406.2 million. Reviewing the results, United Drug said the key success factor was the significant growth, both in absolute sales value and in market share, in United Drug Wholesale in Ireland, and Sangers in Northern Ireland. United Drug Wholesale saw the integration of Dublin Drug with the transfer of part of the business to its Ballina and Limerick wholesale operations. The result has been a more than doubling of sales volumes in the Dublin wholesale operation.

In Northern Ireland, Sangers' profits "benefited from the combination of improved customer service offerings, increased market share, improved margins and good cost management". New Belfast premises were purchased in September and it plans to relocate the entire Sangers agency distribution business there next year. United Drug Distributors, its healthcare agency distribution business, "continues to lead the market in its sector". UniDrug, the joint venture agency business in Britain, achieved its short-term objectives. Perberton Marketing had a "record year". Unitech had a "first class result".