Dechra sees pet lovers continue to spend on animals

PET drugs firm Dechra Pharmaceuticals said half-year revenues and profits continue to grow, driven by its pharmaceuticals business, as people continue to treat their pets despite the downturn.

The group, which makes drugs for animals and humans, said turnover in the six months to the end of December grew nine per cent to £209.5m.

Underlying pre-tax profits were £14.3m, up three per cent from £13.9m in 2010.

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People are still spending the money on their animals,” said chief executive Ian Page, adding discretionary spending is weaker.

“In our key subsidiaries we are still getting about three per cent growth, but the pharmaceutical side is the strong driver.”

Dechra’s Dales Pharmaceuticals plant in Skipton won US regulatory approval late last year, in an “absolutely massive” coup for the business, according to Mr Page.

“We can wave flags and shout about it,” he said. “It’s not just the financial benefit it will have. It’s the badge of honour that it gives to third party manufacturing contracts.”

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The plant can now make Vetoryl 120mg capsules, used to treat Cushings disease, for the US market, after winning approval from the US Food and Drug Administration (FDA).

Mr Page said Dechra is now looking to win approval for other types of pet drugs and new dosage varieties at Dales.

The site has seen a 9.4 per cent increase in contract manufacturing versus a year earlier.

The group said its sales of specialist pet diets were flat in the period, due to phasing of orders.

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Its NVS services business per formed “strongly”, delivering a 7.3 per cent sales increase.

However, margins declined at its services business due to tough competition and changes in the mix of products it sells.

Dechra said the results were in line with its expectations and it continues to trade “robustly”.

“The overall economic environment will continue to pose challenges, especially in our services segment, however overall market growth continues to exceed pre-year expectations,” it said.

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Dechra increased its interim dividend by 10.8 per cent to 4.1p per share.

Charles Stanley analysts said: “We expect a better second half which will benefit from product launches in new jurisdictions and the first contribution for the latest acquisition.

“However, the shortfall in NVS has led us to reduce our estimates for this and next year.”

Shore Capital analysts added: “It is clear that the company has suffered from a continuation of competitive pressures which have necessitated further discounting to hold market share.”

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