Currency headwinds push Hikma Pharmaceuticals profits down

Drug group Hikma Pharmaceuticals reported revenue of $1.44bn (£1.02bn) in its final results for 2015 on Wednesday, down 3% on what was an exceptionally strong 2014.

Its gross margin remained in line with 2014, at 56.8%, reflecting Hikma's cost control efforts across the business. The company's core operating profit of $409m was a 4% dip on 2014, or a 4% rise in constant currency. Group profit attributable to shareholders at $252m was down 9%, or up 2% on a constant currency basis.

Despite a lower contribution from specific market opportunities, particularly in generics, Hikma's net operating cash flow remained strong at $366m.

"Following an exceptional 2014, our branded and injectables businesses performed strongly in 2015 and we made excellent strategic progress in US generics, transforming the future prospects of the group," said chairman and chief executive Said Darwazah.

He said the group's businesses in the Middle East-North Africa region were performing very well, with the company achieving excellent growth in key markets in 2015 whilst continuing to invest in its pipeline to support future growth.

In Europe, Darwazah said Hikma made significant investments into injectable manufacturing capabilities using equipment transferred from the Ben Venue site, and in the US, Bedford was now well integrated and the pace of new injectables launches was accelerating.

"The integration of the acquisition of Roxane, which closed at the end of February, will be a key focus this year and will transform our non-injectables business in the US, adding complementary and well differentiated products, an attractive pipeline, proven R&D capabilities and greater overall scale," he explained.

"Our focus in the short term will be on integrating Roxane and delivering high value, differentiated product launches."

From 2017, Hikma's management expected the benefits from the investments made in recent years to accelerate.

"We have an exciting pipeline across our business segments that will drive accelerated and sustainable future growth," Darwazah concluded.

The FTSE 100 group's board proposed a final dividend of 21 cents per share, making the total dividend of 32 cents per share in line with 2014. Hikma indicated expectations of $2bn-$2.1bn in revenue for the current year.