UDG Healthcare reports rise in quarterly revenues

UDG Healthcare’s revenues and adjusted operating profits in the nine months to 30 June were well ahead of the previous year, according to a trading statement on Thursday.

Operating profit growth in the nine months to June was driven by strong underlying profit growth in its Sharp and Ashfield businesses and favourable currency movements.

More than half of the company’s profits are generated in US dollars following the disposal of its Irish division United Drug Supply Chain and UK travel health business MASTA in April 2016.

As a result, the company has decided it will present its financial results in US Dollars from the start of its next financial year on 1 October 2016. Dividends will also be declared in US dollars rather than in euros.

“The board expects that the change in reporting currency will provide a clearer understanding of the group's financial performance and reduce the impact of currency movements on the group's reported results,” UDG said.

Meanwhile, the group also reiterated its full year market guidance of 6-8% adjusted diluted earnings per share (EPS) growth.

UDG said it was unlikely there will be a material foreign exchange translation impact on reported EPS growth for the full year, based on the average exchange rates for the first nine months of fiscal year 2016.

The firm has also not seen any material impact on underlying trading performance from the UK’s vote to leave the European Union on 24 June, although the ultimate timing and implications of the Brexit vote “remains uncertain”.

“The majority of the group's operating profits are generated outside of the UK,” UDG said.

“In addition, the group's UK businesses mainly operate in market segments which the Group does not expect will be materially affected by the UK's decision to leave the EU.”

UDG said it remains confident in the future growth prospects of its businesses and the long term fundamentals of the group's divisions remain unchanged.

The company is now in a net cash position following the disposal of the United Drug Supply Chain and MASTA, leaving it “well positioned to continue its corporate development activities, which should serve to complement its underlying profit growth”.

“The group expects to deliver a good underlying cashflow performance for the year and reiterates its dividend guidance for fiscal year 2016, whereby it expects to continue its long history of dividend growth.”

Shares fell 0.34% to 592p at 0928 BST.