UDG Healthcare hails 'good' start to year, sees FY EPS up 18-21%

UDG Healthcare said on Tuesday that earnings per share for the year to the end of September 2018 are expected to be up around 18% to 21% on the previous year following a solid first quarter and as it benefits from changes to the US tax system.

In an update for the period from 1 October to the end of December 2017, the company said it made a “good” start to the financial year, with pre-tax profit for the quarter “well ahead” of the same quarter last year thanks to recent acquisitions.

Operating profit in the Ashfield division was “significantly” ahead of the same quarter last year, driven by underlying growth and the benefit of acquisitions completed in FY17. Meanwhile, Sharp's operating profit was behind the same quarter last year as the unusually high churn in the US commercial business in the second half of FY17 carried through into the first quarter of FY18 and as extensive September 2017 hurricane damage in Puerto Rico disrupted manufacturing schedules at a number of its clients in subsequent months.

In the Aquilant business, operating profit was in line with the same quarter last year.

UDG, which derives a significant proportion of its earnings from the US, said the reduction in the corporate tax rate there to 21% from 35% will have a beneficial impact. Based on its preliminary analysis, the company reckons the effective tax rate for FY18 will be around 4% lower than previously expected at around 19%.

As a result of this and the strong performance in the first quarter, it now expects EPS for the year to 30 September 2018 to come in ahead of last year’s $37.1.

In addition, it said that given the additional Future Fit operating costs during the first half of the year and the phasing of Sharp's growth, FY18 underlying profit growth will be largely weighted towards the second half of the year.

At 0925 GMT, the shares were up 0.3% to 814p.