Dechra sees 'strong' trading in first half

Dechra Pharmaceuticals reported “strong” performance in its half-yearly report on Monday, claiming that trading in the six months ended 31 December was in line with management expectations.

The FTSE 250 company said reported Group revenue rose 19.1% at constant exchange rates, and 19.2% at actual exchange rates, to £231.4m.

It said revenue growth in its European pharmaceuticals operations was 18.9% at constant currency, and 18.1% actual exchange rates, while North American pharmaceuticals saw revenue growth of 19.3% at constant exchange rates, and 21.0% on an actual basis.

Underlying operating profit growth was 28.0% at constant currency and 28.2% on an actual basis, rising to £60.8m, with Dechra’s operating margin expanding by 190 basis points during the period to 26.3%.

The company noted that its reported operating profit declined 35.8% at constant currency to £17m, or 35.5% at actual exchange rates, putting that primarily down to increased amortisation of the acquired intangibles.

Underlying EBITDA was ahead 27.7% at £65.3m, and underlying diluted earnings per share improved 11.4% to 41.76p, both at constant exchange rates.

Cash conversion was said to have been “strong” at 110.0%, which Dechra said was driven by the expected unwinding of working capital.

On the operational front, the board said its AST Farma, Le Vet, RxVet and Caledonian acquisitions were performing “well” and in line with its expectations, with the acquisition of Laboratorios Vencofarma do Brasil now completed.

It declared an interim dividend of 9.5p, up 29.6% year-on-year.

“Trading across the group has commenced well in the second half, with particularly strong growth continuing in the US,” said Dechra Pharmaceuticals chief executive officer Ian Page.

“Material synergies from the AST Farma and Le Vet acquisition will increase in the second half and initial indications are that our recent acquisition, Venco, is performing to our expectations.”