Wednesday preview: Hikma Pharmaceuticals reports interims in wake of profit warning

Hikma Pharmaceuticals reports its interim results on Wednesday just weeks after surprising the market with a profit warning.

In a first half trading update on 4 August, the drug maker said it expected full year core operating profit of its generics arm to be between $30m and $40m, compared to $46m in 2015.

It expects full-year revenue, including from its February acquisition of West-Ward Columbus, to be between $2bn and $2.1bn in constant currency, which reflects the growth across its three business segments of injectables, branded and generics.

Hikma said: "The revenue impact from the delay in certain new product approvals will be largely offset by higher contract manufacturing revenue.

"This change in the mix of revenue will have an adverse impact on profitability in 2016, which will also be impacted by higher than expected costs resulting from the acceleration in timing of certain pipeline-related litigation".

However, the company upgraded its injectables segment's core operating margin to about 38% from a previous predicted 36% because of a better product mix.

It reaffirmed its revenue growth expectations for the branded business reflecting the seasonality of the business, as branded revenue was up 1% on constant currency, or down 7% on a statutory basis, to $264m.

Numis analyst Paul Cuddon said: “We would expect the injectables business to continue its strong performance and high margins; Branded Middle East and North Africa performing well on constant currency, but with margins down due to foreign exchange impact on input prices, and the generic division to underwhelm, with the division now expected to generate mid-single digit margins in fiscal year 2016 and potentially break even in the first half.

“We expect forecasts to be slightly more first half weighted than consensus, largely due to the injectables division and see upside to full year forecasts if competition remains absent for the rest of the second half.”

Numis said it expects the outlook for the generics business in 2017 to in focus with generic versions of its asthma treatment Advair set for commercial launch, and its gout treatment Mitigare gaining share from Taked’s Colcrys.

Wednesday 24 August

INTERIMS
Atlas Mara Limited (DI), Candover Investments, Carillion, Costain Group, Glencore , Gresham Computing, Headlam Group, Hikma Pharmaceuticals, Paddy Power Betfair, Sportech, WPP, Xaar

INTERIM DIVIDEND PAYMENT DATE
Blue Capital Global Reinsurance Fund Ltd (DI)

QUARTERLY PAYMENT DATE
Tetragon Financial Group Limited

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
Existing Home Sales (US) (15:00)
Gross Domestic Product (GER) (07:00)
House Price Index (US) (14:00)
MBA Mortgage Applications (US) (12:00)

AGMS
Collagen Solutions, Duet Real Estate Finance Ltd, Gable Holdings Inc., NB Distressed Debt Investment Fund Limited, NextEnergy Solar Fund Limited Red

FINAL DIVIDEND PAYMENT DATE
Aquatic Foods Group