STERLING’S WEAKNESS and slow trading in some divisions hit profits at healthcare services group United Drug in the six months ended March 31st, the company said yesterday.
United Drug, which distributes medicines and equipment to hospitals and pharmacies, reported that profits before tax fell 10 per cent to €30 million during the six-month period, which is the first half of its financial year.
The figure takes into account €13 million in charges, which include a once-off cost of almost €6 million for a restructuring programme which it announced last August, and saw the company reorganise and slim down from four to three divisions.
Operating profits were down 4 per cent at €35 million. United Drug blamed sterling’s weakness for part of the fall in its profitability during the period.
The 19 per cent collapse in the British currency cost United Drug €3 million. At constant currency rates, the company said yesterday that operating profits would have increased by 5 per cent.
Chief executive Liam Fitzgerald said that this was a translation charge, and added that United Drug does not hedge against currency translation differences.
Revenues were flat at almost €851 million.
United Drug is proposing to pay shareholders an interim dividend of 2.23 cent per share, and will offer them the opportunity to take all or part of the the payment in the form of new shares.
The company said that re-organising the business will cost €10 million over the full-year period and will deliver annual savings of between €7 million and €8 million.
Mr Fitzgerald said yesterday that the company has laid off 62 people in the Republic of Ireland, and 200 across the group as a whole.
United Drug has businesses in Ireland, Britain and the US. Revenues in its drug and equipment supplies business were down 5 per cent at €718 million.
Taking currency differences into account, sales were down 1 per cent.
In January, the Republic’s Health Services Executive (HSE) cut refunds for drugs whose patents have run out by 15 per cent, a move that affects public patients and people entitled to reimbursements for prescriptions.
In Northern Ireland, the authorities cut supports for branded pharmaceuticals by 3.9 per cent. Mr Fitzgerald said that both moves had been flagged well in advance.
In its contract sales and marketing business, which provides these services to pharmaceutical manufacturers, sales jumped 36 per cent to €77 million.
This includes a contribution from UniversalProcon, the healthcare conferencing business which United Drug acquired in the first half of its 2008 financial year.
Its speciality and packaging business suffered during the period because US pharmaceutical manufacturers held off on making plans for new products until they knew what plans the new administration had for the country’s health service.
Sales grew 76 per cent to €57 million on the back of acquisitions, but the delay meant the division’s profits suffered.
