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UDG Healthcare profits double in first half but group warns on coronavirus impact

Published: 08:13 19 May 2020 BST

UDG Healthcare - UDG Healthcare profits double in first half but group warns on coronavirus impact

UDG Healthcare PLC (LON:UDG) profits more the doubled in its first half, however, the FTSE 250 group warned that its second half is “expected to be impacted” by the coronavirus pandemic.

For the six months ended 31 March, the healthcare manufacturing, packaging and marketing services firm reported a pre-tax profit of US$62.3mln, up from US$30.3mln a year ago, while revenues climbed to US$693.6mln from US$656.6mln.

READ: UDG Healthcare drops interim dividend, guidance amid pandemic

The group’s underlying profits were boosted by what it said was “continued growth” in its Ashfield and Sharp businesses, which both reported operating profit increases of 24%.

Despite the stronger performance, the company’s dividend remained suspended and it warned that it expected “lower activity levels than previously anticipated” during the second half of the year.

As a result, UDG retained its decision to withdraw guidance for the full year “in light of the ongoing uncertainty and near-term challenges presented by the [coronavirus] outbreak”.

“As announced in our April 2020 trading update, we delivered a strong first-half performance, well ahead of the prior year, driven by underlying growth and acquisitions in Ashfield, and strong demand in our Sharp business.

"While we expect to see an impact from [coronavirus] in the second half, we are implementing plans across the group to mitigate this”, said chief executive Brendan McAtamney.

“UDG is a strong and diversified business, underpinned by excellent long-term market fundamentals and a robust balance sheet and cash flow position. While uncertainty remains, I am confident the decisive actions taken now will ensure we remain well-positioned through the crisis and beyond", he added.

In a note on Tuesday, analysts at UDG’s house broker Liberum retained their ‘buy’ rating and 970p target price on the firm, saying they believed the company’s results were “a positive and gives us greater confidence in our mid-term forecasts”.

“While there is still some uncertainty around [coronavirus] we are increasingly confident that fiscal 2021 will be a more normalised year given the strong industry backdrop with all of the Large Cap European Pharma names beating [first quarter] expectations last month and reiterating guidance”, Liberum said.

“With strong mid-term fundamentals and an unleveraged balance sheet, we think UDG remains attractive”, the broker concluded.

UDG shares moved up 0.6% to 627p in early deals.

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