United Drug says it will continue expansion as profits increase 9%

United Drug is likely to continue with the expansion that saw it spend €170 million on buying up rivals in its last financial year.

The pharmaceutical distribution and healthcare services group yesterday said that profit before tax in the 12 months to September 30th was up 9 per cent, at €59 million from €54 million.

The group agreed to buy five businesses worth €170 million in 2012. Yesterday, chief executive Liam Fitzgerald indicated that this trend was likely to continue, although he declined to name any of the company’s possible targets.

The companies bought this year could contribute €9 million to operating profits in 2013, according to Mr Fitzgerald, on top of savings from synergies.

Mr Fitzgerald also confirmed that the company had considered buying Irish drug wholesaler Cahill May Roberts, which competitor Uniphar is due to purchase for €50 million, but decided against it.

Mr Fitzgerald said a deal would have presented United Drug with practical difficulties and potential problems with competition law. “It just wasn’t a good fit,” he said.

He added that his group was not surprised by the development as it believed that cost pressures, including Government moves to cut spending on medicines, would drive consolidation in the business here.

The group reported a 5 per cent increase in sales to €1.83 billion this year. Operating profits rose 9 per cent to €67.6 million from €62.2 million.

Earnings per share were up 11 per cent at 19.89 cents. The group is proposing to pay shareholders a dividend of 9.04 cents, up 4 per cent on last year. Net debt at the end of the year was €218 million, €96 million more than at the end of September 2011.

Acquisition spending drove much of this increase.

Company results: United Drug

Turnover: €1.83 billion (+5%)

Pre-tax profit : €59 million (+9%)

Earnings per share: 19.89 cents (+11%)

Dividend : 9.04 cents (+4%)