Dechra Pharmaceuticals increases revenues over year

The group, which has its Dales Pharmaceuticals division in Skipton, said revenues for the year to June 30 were five per cent ahead of last year.

Acquisitions contributed 1.8 per cent to the revenue increase while foreign currency movements knocked 0.5 per cent off the figure. The European Pharmaceuticals division, which includes the Dales business, reported a five per cent increase in revenues.

Dechra said pharmaceuticals performed strongly, including the Genitrix brands acquired in December 2010, but growth in pet food revenues slowed in the second half of the financial year.

The United States business saw revenues grow by 49 per cent. This included sales from the DermaPet acquisition which was completed last October.

DermaPet is now fully integrated into Dechra’s existing US operations and the expected synergies are coming through.

The services division saw revenues growing by four per cent compared to last year, with operating margin broadly consistent with last year.

Cash flow in the second half of the financial year was strong, leading to a substantial reduction in net borrowings.

Chief executive Ian Page said: “Although economic conditions have had an impact on our markets, the group has performed in line with our expectations and made solid progress in the financial year.

“We remain confident about our future.”

Analyst Brian White at Shore Capital said: “Although current economic conditions have had an impact on Dechra’s markets, it continues to transform from a low margin distributor to a rounded animal health company.

“We continue to like the demographics of the animal health sector, which has similar growth trends to human ethical pharmaceuticals and maintain our ‘buy’ recommendation.”

Keith Redpath, analyst at FinnCap, said Dechra’s net debt has been substantially reduced, but the company has not said how much it has been reduced by.

“The company reports that the group has performed in line with expectations, so we read by implication that forecast profits have been met,” he said, retaining his ‘buy’ recommendation on the stock.

The group will announced its annual results for the year to June 30 on September 6.

Production at Dales Pharmaceuticals has increased due to the success of its branded pharmaceuticals.

Dechra has been on a buying spree of late.

In December it paid £5.4m for Genitrix, based in West Sussex.

That followed the £40m purchase of DermaPet in October.