‘Strong start’ to year UDG says

Healthcare services provider UDG had a "strong start" to its year, as it benefited from strong operating profit growth within the healthcare communications business. However its United Drug division was hit by changes in the Irish wholesale market.

The company, which will hold its agm at 12pm in Dublin on Tuesday, said that trading for the quarter to December 31st 2014 was ahead of the prior year,in its first quarter trading update.

Operating profit growth was “particularly strong” within the company’s healthcare communications business, which benefitted from the acquisitions made during 2014.

“As anticipated, the US medical services business had a weaker performance relative to a very strong comparable quarter, whilst the European CSO business performed strongly in the period,” the company said.

Operating profits in the group’s United Drug division are behind the same period last year, the company said, due to the recent changes in the Irish wholesale market, while its 2014 disposal of the “specials” business and its interest in the UniDrug joint venture has also reduced the overall profitability of the supply chain division for the quarter. Overall however, the trading of this division was “satisfactory” in the quarter.

The group's Sharp packaging services had a strong start to the year thanks to a positive US performance in the second half of 2014 continuing into 2015. "Europe improved slightly but continues to face challenges. Divisional operating profits in the first quarter are significantly ahead of the prior year," the company said.

UDG will take an exceptional charge in 2015, related to the “ restructuring of the healthcare communications business following acquisitions in FY 2014, restructuring within the United Drug supply chain business which was carried out in the first quarter and further cost reductions through restructuring across other parts of the group”.

Looking ahead, UDG is forecasting currency adjusted diluted earnings per share (EPS)1 for the year to September 30th 2015 to be between 5 and 8 per cent ahead of last year.

UDG also expects to deliver a good underlying cashflow performance for the year.

“When combined with modest debt levels relative to earnings and significant financing facilities, this continues to leave the group well positioned to support its future growth objectives both organically and through acquisition”.