Dechra in fine fettle as acquisitions and forex boost growth

Dechra Pharmaceuticals remained confident in its outlook for the full year as the veterinary specialist's half-year revenue grew strongly thanks to recent acquisitions.

Revenue grew 34.7% at constant exchange rates for the six months ended 31 December to £172.6m, or 55.9% at actual rates, which resulted in a 28.6% rise in underlying operating profit, or 47.1% at actual rates, to £38.6m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 27.7% at constant currency, or 45% at actual rates to £41.6m, and diluted earning per share increased 24.5% to 31.25p.

The FTSE 250 company said that there was a strong performance from recently acquired businesses, which exceeded its expectations. Genera, Laboratorios Brovel, Putney and Apex Laboratories contributed a combined revenue of £40.9m, up from £30.9m.

Revenue from the core European pharmaceuticals segment, excluding acquisitions, rose 5.9% at constant exchange rates, or 20.0% at at actual rates to £99.4m.

North American pharmaceuticals segment revenue increased 10.2% at constant exchange rates, or 31.7% at actual rates, to £32.3m.

While there was sales growth across all product groups in companion animal products, food producing animal products, equine and diets.

Net cash inflow from underlying operating activities was £43.9m with a cash conversion of 124% and Dechra declared an interim dividend of 6.11p, up 10% compared to the previous year.

The company said that it expects continued currency volatility as the euro and dollar are the two currencies it trades in and the fluctuations could impact results given the current global political and economic environment.

In the first half of the year Dechra made foreign exchange gains of £800,00, compared to a loss of £700,000 in the previous period, and translational gains of £9.5m on revaluing its balance sheet at the half year exchange rate.

Despite risk associated with foreign exchange rates, a reduction in antibiotic use in Western Europe and supply chain relationships, the business continues to perform well with current trading meeting expectations.

“Our core portfolio continues to grow, the enhanced product pipeline is delivering new products and good progress has been made on the rationalisation and integration of our recent acquisitions. The board therefore remains confident in our strategy, our future prospects and our expectations for full year performance,” it said.

Shares in Dechra Pharmaceuticals were up 4.16% to 1,604p at 0843 GMT.