Success in North America continues to drive positive momentum at Dechra Pharmaceuticals (DPH) as sales growth in the region increased by 20.7% to £73.2m in the second half of 2017.
The veterinary pharmaceuticals specialist is also enjoying a strong performance in Europe with sales rising 5.8% over the same period.
Operating profit increased 22.3% to £47.4m thanks decent to uptake of its companion animal products, equine, food producing animal products and nutrition products.
Shares in the company nudge up 0.5% to £23.38 on the news. They are up nearly 50% over the past year.
US TAX CUT TRIGGERS EARNINGS UPGRADE
N+1 Singer analyst Chris Glasper has upgraded his earnings per share forecast by 3.2% to 75.6p for the year to 30 June 2018 and by 0.7% to 88.8p for 2019.
The upgrades were prompted by a US tax rate cut from 21.9% to 20.5% for Dechra.
Glasper is impressed with trading in North America amid generic competition and hurricane disruption in Texas and Florida.
‘The only fly in the ointment is Equine, where generic competition in Equipalazone is hurting sales,’ comments the analyst.
Sales in Equipalazone, Dechra’s largest and oldest product for horses, declined by 4.3% in Europe during the six month period - but Glasper believe new products should return the Equine category to growth soon.
RECENT ACQUISITIONS SET TO BOOST TRADING
Further upside is expected for the veterinary pharmaceuticals firm from the acquisition of AST Farma and Le Vet.
Investec analyst Andrew Whitney says operating profit beat his forecasts and is upbeat about Dechra’s latest acquisitions, which are currently being integrated.
He also overlooks the impact of disappointing sales in Equine in Europe as strong trading in the US offset the weak performance.
