Dechra Pharmaceuticals half-year revenue jumps 10.5%

Dechra Pharmaceuticals reported a jump in half-year revenue on Tuesday as it said changes to US taxes are expected to have a positive impact on the group

In an update for the period from 1 July to the end of December 2017, the company said trading was “strong” and in line with its expectations, with revenue up 10.5% at constant exchange rates, or 11.5% at actual exchange rates.

European pharmaceuticals growth was around 5.5% at CER, or 8.5% at AER, while revenue in North America pharmaceuticals was up around 20% at CER, or 17.5% at AER.

During the period, Dechra completed a small bolt-on acquisition of RxVet Limited, New Zealand.

It also achieved new product registrations. In European Pharmaceuticals, this included Avishield IB H120, its second EU registered poultry vaccine, while a number of minor registrations were achieved in its international division following its formation in July 2017.

The group has now launched all the dosage sizes of Amoxi-Clav tablets in the US, and Vetoryl and Osphos in Mexico.

Also on Tuesday, Dechra said it is in the process of reviewing and quantifying the effect of US tax changes.

“Overall, an initial provisional assessment indicates that the effect is expected to be modestly favourable on an ongoing underlying basis. A material one-off non-cash non-underlying credit will arise due to the revaluation of deferred tax balances"

RBC Capital Markets said: "We reiterate our view on Dechra as a long-term compound growth story and Outperform rating with £22 price target. We had feared that Dechra could have been impacted by recent events in the US that have been seen with peers, but the company appears to be in rude health, and our caution appears unwarranted. Whilst the shares had appeared to reach a ceiling we believe they could break out following this update, particularly given the positive news on tax."

At 1210 GMT, the shares were up 2% to 2,046p.