Dechra Pharmaceuticals (LON: DPH) has issued the following unaudited Trading Update covering the half year reporting period from 1 July to 31 December 2019 (the Period).
Overview
The Board is pleased to confirm that the outlook for the full year is in line with management expectations, however the balance of trading will be more second half weighted than is typical for Dechra.
As outlined in our preliminary results announcement in September and at the time of the Annual General Meeting, trading was adversely affected by supply problems, predominantly in the first quarter. Significant progress has been made and the supply issues have been largely mitigated.
Highlights
· Group net revenue for the Period increased by c.7% at constant exchange rates (CER) (c. 7% at actual exchange rates (AER)).
· European Pharmaceuticals net revenue growth was c.13% at CER in the Period (AER c.12%).
· North American Pharmaceuticals net revenue declined by c.2% at CER in the Period (AER c.0%).
· Venco and Caledonian acquisitions performed ahead of expectations.
· Asset purchase agreement signed post period end for the acquisition of a major otic product, Osurnia.
Operational Review
European Pharmaceuticals
In the Period, our total European Pharmaceuticals segment net revenue increased by c.13% at CER (AER c.12%), including the acquisitions of Caledonian (acquired 8 October 2018) and Venco (acquired 17 December 2018).
Existing net revenues, excluding third party contract manufacturing (non-animal health which Dechra is strategically exiting) increased by c.9% at CER (AER c.8%).
North American Pharmaceuticals
In the Period, our North American segment net revenue declined by c.2% at CER (AER c.0%). This decline was attributable to the supply issues outlined above and is also due to a strong comparable Period last year that benefited from exceptional sales of Zycortal as a result of a competitor being out of stock.
Acquisition
The acquisitions of Venco and Caledonian are performing ahead of expectations with integration of both now complete. The acquisition of Ampharmco completed on 28 August 2019 and the integration plan is well underway.
On 6 January 2020 we announced we had reached an agreement to acquire the assets of Osurnia, a major product for the treatment of otitis externa in dogs with a turnover of $31.2 million for the 12 month period to 31 December 2018.
Completion of our acquisition of Osurnia is conditional upon approval of Dechra as a suitable buyer by the European Commission and the Federal Trade Commission in that context. We are already present in the otitis externa space with a number of products and our range of ear cleaners. The addition of Osurnia will allow us to offer an extended range of solutions for veterinarians to manage otitis externa and offer the best treatment for the pet taking into consideration the veterinarians’ clinical preference and the owners’ lifestyle. Dechra’s expertise in this arena will bring a lot of added value to otitis externa management for veterinarians.
Notice of Results
Dechra will announce its Interim Results for the Period on 24 February 2020.
Ian Page, Dechra Pharmaceuticals Chief Executive Officer, commented:
“Overall, our progress in the first half has been satisfactory and demand for our products remains strong. Trading in Europe was good while North American growth, as expected was constrained but should now resume as we return to normal supply chain inventory levels. Our recent acquisitions are integrating well, and we were pleased to reach agreement to acquire Osurnia. We therefore remain confident in our prospects for the second half and for the year as a whole.”
