LONDON, February 26, 2018 /PRNewswire/ --
Dechra Pharmaceuticals PLC, LSE: Main Market: symbol DPH)
today releases its Half-Yearly Financial Report 2018 for the
six months ended 31 December 2017
(the Period).
Ian Page, Chief Executive
Officer at Dechra commented:
"Dechra has performed well in the Period with
solid revenue growth in EU pharmaceuticals and strong revenue
growth in NA Pharmaceuticals from the existing business. This has
been delivered through the consistent application of our successful
strategy, converting pipeline opportunities, leveraging our strong
portfolio, and expanding our geographic presence. The acquisitions
of AST Farma, Le Vet and RxVet will supplement our opportunities
further.
Current trading continues in line with management
expectations and the initial phase of integration of the AST
Farma/Le Vet acquisition is progressing well. The Board remains
confident that we can continue to implement our strategy and meet
our expectations for the current financial year and
deliver further growth in the future."
"The Board remains confident that we can continue to
implement our strategy and meet our expectations for the current
financial year and deliver further growth in the
future."
Half-Year Highlights
- Trading in the Period was strong and in line with management
expectations.
- Reported Group revenue for the Period increased by 11.2% at
Constant Exchange Rate (CER) (12.5% at Actual Exchange Rate
(AER)).
- European Pharmaceuticals revenue growth was 5.8% at CER (9.2%
at AER).
- North American Pharmaceuticals revenue growth was 20.7% at CER
(18.3% at AER).
- Underlying operating profit growth of 22.3% at CER (22.6% at
AER) with operating margin expansion of 220 bps to 24.6%.
- Strong cash conversion of 96.2% includes pre product launch
stock builds.
- Small bolt on acquisition of RxVet Limited, New Zealand, was completed.
- Major acquisition of AST Farma and Le Vet announced post Period
end.
- Underlying diluted EPS growth of 19.8% to 37.58 pence. Interim dividend increase by 20.0%
to 7.33 pence.
Half-Year Financial Report - key
extracts
The Group has delivered a strong performance throughout the
Period, driven by solid revenue growth in our European
Pharmaceuticals Segment and by excellent revenue growth in our
North American Pharmaceuticals Segment. All product categories
delivered growth at CER: Companion Animal Products (CAP) 18.4%,
Equine 19.3%, Food producing Animal Products (FAP) 3.2% and
Nutrition (Pet Diets) 2.9%. The operating profit performance was
enhanced by operational leverage, prudent cost control and
efficiency gains within the Manufacturing and Supply Chain. A small
acquisition was completed in the Period providing us with access to
the New Zealand market, but more
significantly a major acquisition was completed post the Period end
on 13 February 2018 which will
materially enhance our EU product portfolio and pipeline.
Operational Review
European Pharmaceuticals
In the Period our European Pharmaceuticals Segment reported
revenues increased by 5.8% at CER (9.2% at AER). Excluding third
party contract manufacturing and treating Apex on a like-for-like*
basis, revenues increased by 4.2% at CER (7.6% at AER). Apex, an
Australian business acquired in October
2016, which is part of Dechra Veterinary Products
International, is included with the European Pharmaceuticals
Segment. CAP continues to be the main growth driver, with sales
increasing in all of our focus therapy areas. We have delivered FAP
revenue growth at 3.7%, a solid performance in a market still
experiencing pressure to reduce antibiotic usage. Nutrition is
recovering with growth of 2.9% following the resolution of historic
supply and palatability problems and is in the process of being
relaunched with new packaging design and improved palatability.
Despite increasing market penetration of Osphos®, our Equine
sales declined by 4.3% due to continued generic competition to
Equipalazone®, our largest and oldest product for
horses.
*As Apex was acquired on 14 October
2016, the amounts represented by EU Pharmaceuticals -
Acquisitions represent the Apex results for the period 1 July 2017 to 14 October
2017. In the current period and prior period, the results
from 14 October to 31 December are included within EU
Pharmaceuticals - Existing, which is referred to as a like-for-like
basis.
North American Pharmaceuticals
In the Period our North American Pharmaceuticals Segment
reported revenues increased by 20.7% at CER (18.3% at AER). This
was a very pleasing performance as it was achieved in an
environment where distributors were selling white label goods to
compete with Carprovet (one of our major products), and in a period
when two natural disasters disrupted trading in Florida and Texas. We delivered excellent growth from both
CAP, across all therapeutic areas of focus, and Equine, which was
predominantly from Osphos. CAP and Equine are currently the
only two categories we operate in within the North American market.
Investment continues to be made in the US sales team where we have
increased the reporting regions from four to six adding two
regional managers, 20 field based sales managers and two new
internal sales personnel.
Acquisition
Within the Period we completed one small acquisition and have
subsequently announced, post the Period end, a major acquisition of
two associated Dutch companies.
In December 2017 we completed the
acquisition of RxVet Limited, a small CAP business in New Zealand. RxVet have been Dechra's
distributor since 2010, with revenue in the year to March 2017 of NZ$1.4 million; sales of Dechra
products account for approximately half of this.
On 13 February 2018 we completed
the acquisition of AST Farma and Le Vet for €340.0 million on a
debt-free cash-free basis, paid for 75.0% in cash and 25.0% in
Dechra shares which are subject to a two year lock-in. Part of the
cash consideration was funded by £105.0 million (net of discounts)
placing and the balance from new debt facilities. AST Farma
strengthens our position within the Dutch market and provides us
with a direct to veterinarian relationship with the potential to
increase sales of our existing brands. Le Vet strengthens our
product portfolio across Europe
with 60 generic plus registrations which can be sold through our
existing sales and marketing networks. The initial phase of
integration is underway and proceeding to plan; further details
will be provided on our progress at the announcement of our year
end results in September 2018.
Pipeline Delivery
Several new product registrations were achieved, and numerous
new products launched within the Period.
A number of new FAP registrations were achieved in Europe:
Solacyl® Water Soluble Powder, a line extension of an
existing product for turkeys;
Diatrim®, an antibiotic for cattle mastitis; and
Avishield® IBH120, our second EU registered poultry
vaccine developed in our Croatian facility.
Numerous international registrations were also achieved,
including products for New
Zealand, Thailand,
Kazakhstan and Australia.
In North America we have
extended the range of our Vetivex® critical care fluids and
have launched all dosage sizes of AmoxiClav Tablets. The
final low dose strength of AmoxiClav was made available after
working closely with our manufacturing partner who implemented a
new production line specifically for this tablet size. In
Mexico we have launched
Osphos, Vetoryl®, Cyclospray® and several
products from our dermatology range.
In addition, to our own pipeline, we have also acquired new
products from licensing deals:
Redonyl Ultra, a dermatological supplement from Premune, has
been launched in the EU and we are currently developing it into a
soft chew for the US market;
Vetradent, a water additive to combat biofilms from Kane Biotech
Inc., extending our dental range, has been launched in the US;
and
Bioequine, our first vaccine from Bioveta, for equine herpes
virus, has been launched in Germany.
We continue to work with Animal Ethics Pty Ltd to accelerate the
global registration of Tri-Solfen. Pressure from consumers to
improve farm animal welfare continues to increase, strengthening
anticipated demand for this unique product.
People
We have created a new Senior Executive Team role and
subsequently employed Andrea Dodds
as Global Marketing Director. Andrea joins us having held numerous
international senior roles with Colgate Palmolive. An experienced
Supply Chain Director has been appointed to manage our increasingly
complex network of suppliers and we have strengthened the HR team
with new appointments within our Manufacturing Group and in
Mexico.
Half-Year Financial Summary
Restated
Six months Six months Growth at Growth at
ended ended actual constant
31.12.17 31.12.16 exchange exchange
GBPm GBPm rate rate
Revenue 194.1 172.6 12.5% 11.2%
Underlying
Operating profit 47.4 38.6 22.6% 22.3%
Operating profit % 24.4% 22.4%
EBITDA 51.0 41.6 22.5% 22.0%
Diluted EPS 37.58p 31.25p 20.3% 19.8%
Reported
Operating profit 26.3 14.0 87.1%
Diluted EPS 28.69p 10.66p 169.1%
The Group presents a number of non-GAAP Alternative Performance
Measures (APM's). This allows investors to understand better the
underlying performance of the Group, by excluding amortisation of
acquired intangibles and impairment (if any) of acquired
intangibles, acquisition expenses, fair value of uplift of
inventory acquired through business combinations, rationalisation
costs, loss on extinguishment of debt, and fair value and other
movements on deferred and contingent consideration, and the
taxation effects thereon. EBITDA is defined as underlying earnings
before interest, tax, depreciation and amortisation.
To read in full please visit
http://www.dechra.com
or
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/DPH/13544957.html
About Dechra
Dechra is an international specialist veterinary pharmaceuticals
and related products business. Our expertise is in the development,
manufacture, and sales and marketing of high quality products
exclusively for veterinarians worldwide.
The majority of Dechra's products are focused on key therapeutic
categories where we have leading market positions, and many of our
products are used to treat medical conditions for which there is no
other effective solution or have a clinical or dosing advantage
over competitive products.
For more information please visit: http://www.dechra.com or
corporate.enquiries@dechra.com .
Stock Code: Full Listing (Pharmaceuticals): DPH.
LEI: 213800J4UVB5OWG8VX82
Trademarks
Dechra and the Dechra "D" logo are registered trademarks of Dechra
Pharmaceuticals PLC.