Exchange rate headwinds prevail at Dechra

Exchange rates were proving a headwind for Dechra Pharmaceuticals, with the firm reporting good revenue growth in its first half to 31 December, muted by the cost of conversion.

The FTSE 250 company said trading in the first half was strong, with group revenue growth - including Genera - of 14.9% at constant exchange rates, or 9.7% at actual exchange rates, to £110.7m.

Underlying operating profit grew 24.2% at constant currencies - 13.9% at actual exchange rates - to £26.3m. Excluding Genera - which the group acquired in October 2015 - revenue growth was 11.1% at constant currencies, or 6.4% at actual exchange rates.

"We are pleased to report a strong performance in the first half," said Dechra chief executive Ian Page.

"All our business units are performing well, we are in the process of launching several new products, our international expansion plans are progressing as expected and we have made two strategic acquisitions," he added.

Dechra's EU Pharmaceuticals division saw revenue growth of 8.1% at constant currencies, but it was continuing to be adversely affected by exchange rate headwinds, with growth just 0.9% at actual exchange rates.

Momentum was strong in the North American division, where revenue grew 51.9% at constant currencies.

During the period, Dechra received regulatory approval for Zycortal, a canine endocrine product for the treatment of Addison's disease. Two food-producing animal product antibiotics - Phenocillin and Solamocta - also received EU approval.

Underlying diluted earnings per share increased by 17.6% at constant currencies, or 7.2% at actual exchange rates, to 21.99p per share.

Following the acquisition of Genera and the investment towards US expansion, Dechra's net debt was £17.8m at 31 December, down from net cash at £3m a year earlier.

The company's board increased its interim dividend to 5.55p per share, up 8.4% on the prior year.

"We remain in a strong position to continue to grow the business and deliver returns to our shareholders," Page concluded.