MEDICINES distributor United Drug said its first-half profits will be below the same period last year due to the impact of sterling but is optimistic full-year profits will be “in line” with 2008.

The company said while some parts of the business were experiencing challenging trading conditions, others were “very buoyant”.

A restructuring programme that will result in once-off costs of €10 million remains on schedule and would be completed in the current financial year, the company said in a statement.

United Drug expects the restructuring to generate annualised savings of up to €8 million.

Among the difficulties facing the company is a 19 per cent depreciation in sterling against the euro over the first six months of its financial year to March 31st.

The company generates about 45 per cent of its earnings from the UK.

“United Drug remains positive about the fundamentals of its core markets and its position within those markets despite the current challenging economic environment,” the statement said.

The company said it was looking at expanding its international healthcare business organically and through acquisition and said it had a strong balance sheet to support such growth.

On a sectoral basis a slowdown in capital spending has impacted on the firm’s medical and scientific business in Ireland and Britain, while consumables and maintenance revenues have held up reasonably well.

In a note to investors, Davy Stockbrokers said it appeared contract packaging issues identified by United Drug in February in relation to its Sharp Corp distribution business “have at least stabilised”.

Shares in United Drug closed down up over 3 per cent at €1.61 with the overall Iseq weaker.

At this price the company has a market value of €378 million.

It will announce half-year results on May 6th.