Improved revenues prove pet subject for Dechra

The group, which has its Dales Pharmaceuticals division in Skipton making drugs for pets and humans, said trading in the three months to the end of March was in line with the level seen in the prior six months.

For the nine months to the end of March, group revenues increased by four per cent on a year earlier.

“Current trading remains in line with the board’s expectations and we remain confident that the group will continue to make good strategic progress throughout the remainder of the financial year,” said Dechra’s chief executive Ian Page.

Dechra said third quarter revenues from its European products division grew by 5.1 per cent compared with the same period last year.

The group added pharmaceuticals, which includes the Dales business, reported revenues in line with expectations but revenues from its range of pet food, although still outperforming the market, “experienced some softness”.

Revenues from the group’s US Pharmaceuticals was ahead of last year by 68.1 per cent in the third quarter, which included the benefit of DermaPet, bought in October.

Dechra’s services division increased revenues in the third quarter by 2.6 per cent.

Keith Redpath, analyst at stockbrokers FinnCap, reiterated his buy recommendation.

“Divisional growth looks to be in line with our forecasts and management reports that trading is in line with expectations.

“The DermaPet acquisition is having a positive impact on US revenues, up 36.4 per cent on the nine months to March,” he said.

Shares in the company closed up 7p at 501.50p.

Earlier this year Dechra delivered an increase in half-year profits and turnover, after it recorded a strong performance from its veterinary products businesses in Europe and the US.

Revenues in the six months to December 31 were £192.2m, compared with £184.4m in the same period the year before.

Underlying profits before tax rose by 1.5 per cent to £13.9m.

The company said overall production at Dales Pharmaceuticals increased due to the success of its branded pharmaceuticals.

The company added: “Contract manufacturing, as expected, was lower than last year entirely due to a planned reduction in production for our biggest single contract.

“New contract manufacturing opportunities have been won, with production commencing in the second half of our financial year.”

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.