Alliance Pharma flags solid rise in first-half revenue

Alliance Pharma said in a half-year trading update on Monday that its revenue rose to £84.8m, a 2.8% increase year-on-year, and a 5% increase at constant exchange rates.

The AIM-traded firm, which was holding its annual general meeting, said consumer healthcare revenue saw a notable rise, up 5% at constant currency to £61.4m.

That growth was driven by a strong performance from the Kelo-Cote franchise, which saw an 18.4% increase in revenue to £29.2m.

Despite that, Nizoral revenues fell 20.9% at constant exchange rates to £8.3m due to inventory destocking in the first half of 2023 ahead of a manufacturing change.

However, Nizoral was expected to recover and show strong growth in the second half of 2024, bolstered by new product launches.

Amberen revenue declined 8.9% at constant currency to £5.2m, attributed to softer trading on Amazon and a market shift away from traditional retail.

Other consumer healthcare products saw an 8.9% constant currency revenue increase to £18.7m, with MacuShield up 16.0% on the same basis to £4.8m.

Prescription medicine revenue grew 3.4% at constant exchange rates to £23.3m, driven by a 9.6% increase in Hydromol revenues to £5.1m and the return to stock of several products affected by regulatory transitions from the Medical Devices Directive to the Medical Devices Regulations.

Solid free cash flow generation led to a reduction in net debt, with group leverage anticipated to fall below 2.0x as of 30 June, down from 2.05x at the end of 2023.

Looking ahead, Alliance Pharma said it expected revenue growth to continue in the second half, which it said would drive gross margin improvements.

The improvements would support further investments in marketing and innovation.

Its board said it remained confident that the group’s profitability for the 2024 financial year would be in line with 2023.

Additionally, net debt and group leverage were expected to decrease further in the second half of 2024, reflecting continued strong cash generation.

“I have enjoyed deepening my knowledge of Alliance since joining the business in mid May and am excited about our potential,” said chief executive officer Nick Sedgwick.

“My initial focus has been to streamline the Company's management structure, to accelerate decision making and to bring the consumer closer to the heart of the business, and I see further opportunity to deliver efficiency gains and capability improvements.

“I am pleased by the performance we delivered in the first half as we continue to see the benefits of our investment in both marketing and innovation.”

Sedgwick said the firm’s free cash flow was expected to build strongly throughout 2024, which it anticipated would enable it to reduce further its net debt and leverage by the end of the year.

“The board's expectation for full year financial performance is unchanged and I look forward to presenting my refined strategy in the fourth quarter of this year.”

At 1116 BST, shares in Alliance Pharma were up 3.17% at 38.43p.

Reporting by Josh White for Sharecast.com.