UDG Healthcare (UDG) is planning a review of clinical services division Ashfield and reshuffling management after an up and down second quarter performance.
One of the biggest shake-ups is the departure of Ashfield vice-president Jez Moulding.
UDG is also selling pharmaceutical products distributor Aquilant to H2 Equity Partners for up to €23m. The funds will be be used to develop higher margin divisions Ashfield and Sharp.
CHALLENGES IN COMMERCIAL & CLINICAL
Shares in UDG declined 5.8% to 771.5p as Ashfield Commercial & Clinical struggled with a challenging quarter, causing operating profits to fall ‘well below’ the same quarter last year.
The poor performance has been blamed on the phasing of contracts and fewer new business development opportunities.
The bad news offset news that sales and pre-tax profit in the nine months to 30 June is well ahead of the prior year.
This was primarily driven by acquisitions instead of organic growth.
It also overshadowed double digit operating profit growth in packaging solutions business Sharp following robust trading in the US.
Under Ashfield, Communications & Advisory performed well, driven by good underlying growth and the acquisitions of communications agency Create NYC and consulting firm SmartAnalyst.
US GROWTH 'ENCOURAGING'
Liberum’s Graham Doyle is encouraged by US growth and is not concerned about a slower than forecast ramp-up in Europe as UDG is introducing several large, long duration contracts.
He dismisses weakness in the Commercial & Clinical business as it represents 26% of earnings and is arguably ‘the lowest quality’ division and lowest contributor to future growth.
