Results round up: Hikma Pharma, Marshalls, Polymetal

Hikma Pharmaceuticals nudged its dividend higher as profits were held back last year due to a combination of lower profits from the generics business, greater investment in growth and currency effects.

On revenue up 39% to $1.95bn over the calendar year, the FTSE 100 drug maker generated statutory operating profits of $302m, which were down 21% on the previous year, though excluding exceptional items like acquisition costs, goodwill amortisation and inventory adjustments, core operating profits were up 2% to $419m.

Profits before tax fell 34% to $210m but core profits were boosted by strong growth in injectables and branded drugs, which was offset by a decline at the generics business as it integrated last February's $1.7bn acquisition of specialty generics company West-Ward Columbus and more than doubled its investment in research and development across the group.

Core basic earnings per share shrank 18% to 118.5 cents, or 5% in constant currency, as Hikma had issued 40m extra shares in February last year as part of the West-Ward Columbus acquisition.

With operating cash flow of $293m, down from $366m the prior year, the board proposed a final dividend of 22 cents per share, which would lift the full year dividend by a penny on the previous year to 33 cents per share.

Chairman and chief executive Said Darwazah said the addition of West-Ward Columbus was transforming the generics business and the group as a whole.

"This is our largest acquisition to date and the integration process has been both challenging and exciting. We expect the Generics business to achieve significant growth in revenue and profitability in the coming years as we focus on pipeline execution and portfolio optimisation."

However, it is the global injectables business that has delivered the strongest growth in revenue and operating profit,

Marshalls

Specialist landscape products group Marshalls reported a 31% jump in full-year profit on Wednesday thanks to an improvement in operating margins.

In the year to the end of December, pre-tax profit rose to £46m from £35.3m as operating margins improved to 12% from 9.7% and revenue grew 3% from 2015 to £396.9m.

Sales to the domestic end market, which represents 31% of group sales, were up 10% for the year compared with 2015, and were particularly strong in the second half when they rose 14%.

Meanwhile, sales to the public sector and commercial end market, which represent 64% of group sales, were broadly in line with the prior year.

Marshalls said that based on public indicators, it continues to outperform its peers and gain market share.

Basic earnings per share rose 32% to 18.95p and the company’s final ordinary dividend increased 22% to 5.80p per share.

Chief executive Martyn Coffey said: “The group has again delivered significant profit growth in 2016 with the underlying indicators remaining supportive in Marshalls’ main end markets. The Construction Products Association’s recently published Winter Forecast reflected a slight improvement in medium term growth assumptions compared with the Autumn Forecast."

Polymetal International

Polymetal International announced its preliminary results for the year to 31 December on Wednesday, with revenue increasing 10% over 2015, to $1.58bn.

The FTSE 250 firm said average realised gold and silver prices increased by 8% and 11% respectively, with gold sales at 880 Koz, up 2% year-on-year, and silver sales at 30.7 Moz, down 2% year-on-year, in line with the board’s “production volume dynamics”.

Group total cash costs were $570 per gold equivalent ounce, up 6% from 2015 levels and within Polymetal’s original guidance of $550 to $575/GE oz.

The company’s all-in sustaining cash costs amounted to $776/GE oz, up 6% year-on-year, slightly above the guidance range of $700 to $750/GE oz, which the board said was driven mostly by an increase in total cash costs and the appreciation of the Russian rouble against the dollar in the second half of the year.

Adjusted EBITDA was $759m, an increase of 15% year-on-year, on the back of higher commodity prices and stable production, with Polymetal’s adjusted EBITDA margin 48% compared to 46% in 2015.

Net earnings were $395m, against $221m in 2015, reflecting an increase in EBITDA and the impact of foreign exchange gains driven by the strengthening of the rouble.

Underlying net earnings - adjusted for the after-tax amount of write-down of metal inventory to net realisable value, foreign exchange gains/losses and change in fair value of contingent consideration liability - were $382m, up 31% year-on-year.

Polymetal said capital expenditure was $271m, up 32% compared to 2015 but below the reduced guidance of $310m, due to favourable exchange rate dynamics in the beginning of the year.

The group was reportedly on track with the construction of Kyzyl and the POX debottlenecking project.

In the course of 2016, the company said it continued to generate significant pre-acquisition free cash flow, which amounted to $257m - up from $263m.