United Drug reports 26 per cent surge in earnings

Drug wholesaler and distributor United Drug has reported a 26 per cent increase in pre-tax profits.

The group's four divisions contributed to the pre-tax profits of €38.3 million in the year to the end of September as operating margins widened on sales of €1.6 billion.

The figures received a warm welcome in the market with all analysts indicating they would be upgrading their forecasts for the current year by between 2 and 5 per cent.

The company's shares rose more than 4 per cent before profit-taking knocked it back to close nine cents stronger on €3.37 in strong volumes.

The company's core pharmaceutical wholesale business increased turnover and profitability significantly, the company said.

Its status as the one Irish drugs wholesaler not to also own pharmacies meant it continued to attract new business from independent retailers, United Drug said.

Medical and scientific distribution, sales and marketing turned in the strongest performance relative to forecasts, with both Irish and British operations contributing.

The one blot on the company's figures was the performance of its British distribution joint venture, UniDrug Group. Difficulties in completing construction of a new warehouse has led to increased costs and productivity losses at the operation.

The warehouse is now due to come on stream next month, well behind schedule.

Elsewhere in the outsourced sales and distribution business the company said it had grown market share, attracting new clients even though no major pharmaceutical companies had decided to outsource during the year.

The company has proposed a final dividend of 3.48 cents per share, bringing the full-year dividend to 4.8 cents per share, up 17 per cent on the previous year.

United Drug chief executive Mr Liam Fitzgerald told a Davy conference on small and mid-cap companies last week that the company was close to the end of a period of significant capital investment in the business

NCB said the figures showed the company was in a strong position to maintain earnings per share growth in the low to mid-teens, at least in the medium term.