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Hikma Pharmaceuticals Plc

Hikma Pharma falls as it narrowly misses forecasts with 2018 results

Revenues rose 7% to US$207bn last year, while operating profit jumped 19% to US$460mln, but analysts had expected slightly more

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The surge in profits last year was down to a pick-up in margins in the generics business

Shares in Hikma Pharmaceuticals PLC (LON:HIK) dropped on Wednesday morning after the drugmaker narrowly missed forecasts with its 2018 results.

The FTSE 100 company, which makes everything from painkillers to antibiotics to thrombosis treatments, saw revenue rise 7% last year to US$2.07bn (2017: US$1.94bn) while operating profits jumped 19% to US$460mln (2017: US$386mln).

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The top-line growth reflected “good demand for [its] in-market products and new product launches”, Hikma said, while profitability was driven by a “strong improvement” in margins in its generics business.

“The group has delivered a strong performance in 2018, with revenue and profitability significantly ahead of our expectations at the start of the year,” said chief executive Siggi Olafsson, who joined last year.

“Our injectables business continued to perform very well, demonstrating the diversification of our portfolio, the flexibility of our operations in responding to customer needs and our ability to bring important products to market.

He added: “The significant commercial and operational improvements we have made enabled our generics business to deliver strong growth and our Branded business continued to grow steadily.”

Shares down on slight miss, though

But shares fell almost 4% in early deals to 1,592p, as the numbers came in slightly below what the City had been expecting.

In a note to clients, analysts at Peel Hunt said: “2018 revenue US$2,07bn was 1% below Peel Hunt and company-gathered consensus.

“US$460m pre-ex operating profit was 2% below our forecasts and consensus, largely due to higher ‘other opex’ expense, which included impairment charges.”

Going forward, Hikma expects global injectables revenue to grow to between US$850-900mln in 2019, although margins are expected to fall slightly.

As for the generics business, revenue is likely to drop in the year ahead, although a pick-up in margins will partially offset that.

Quick facts: Hikma Pharmaceuticals Plc

Price: £19.92

Market: AIM
Market Cap: £4.83 billion
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