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Ebos 1H profit lifts 12% to record $76.7M

Wednesday 21st February 2018

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Ebos Group, the pharmaceutical and animal health products maker, said its first-half profit lifted 12 percent as it reaps the benefits of a diverse portfolio and it remains positive about the full year.

Profit rose to a record $76.7 million, or 50.4 cents per share, in the six months ended Dec. 31, from $68.8 million, or 45.4 cents, a year earlier, the Christchurch-based company said in a statement. Total revenue slipped 0.4 percent to $3.94 billion on lower hepatitis C medicine sales. 

Ebos transformed itself in 2013 with the purchase of Australian pharmaceutical wholesaler and distributor Symbion and has since bought New Zealand vitamin and herbal tea maker Red Seal, pharmaceuticals firm Zest, Australian pharmacy retailer Good Price Pharmacy Warehouse, the Black Hawk Premium Pet Care pet food business and merged its Australian Chemmart pharmacy chain with rival Terry White Group. In May last year it bought Australia’s largest provider of outsourced pharmacy services to hospitals, HPS, for A$154 million and acquired a 14.1 percent shareholding in MedAdvisor Ltd, Australia’s leading digital medication management company, last October. 

“Our record first-half results are in line with our expectations and reflect a consistent positive momentum across both our healthcare and animal care businesses,” said chief executive Patrick Davies.

First-half earnings before interest, tax, depreciation and amortisation lifted 16 percent to $138.5 million and the company reiterated that it expects a 10 percent lift in constant currency, underlying ebitda for the year. The constant currency forecast strips out any currency swings with some 83 percent of its earnings generated in Australian dollars. 

Total revenue in the healthcare segment slipped 0.2 percent to $3.7 billion but ebitda lifted 13 percent to $120 million. The revenue decline was primarily driven by a $250 million reduction in hepatitis C medicine sales, it said. 

Within the healthcare segment, Australian revenue was down 5.6 percent while ebitda was up 9 percent, bolstered after it bought HPS. New Zealand revenue lifted 5.1 percent and ebitda was up 7.5 percent. 

Davies said the animal healthcare segment also continues to perform strongly. Total revenue slipped 3.8 percent to $207.9 million, principally due to ceasing low-margin wholesale sales to a major retail chain in Australia and discontinuing sales of Mars products after introducing Black Hawk Premium Pet Care into New Zealand. Ebitda lifted 15 percent to $24.3 million. 

Black Hawk is Australia's fastest growing premium pet food brand with a leading position in the pet speciality retail market, Ebos said. Black Hawk was launched into New Zealand in July 2017 and "has gained strong acceptance from both speciality retailers and veterinary clinics," Ebos said. 

Capital expenditure for the period was $31.5 million, with $17 million spent on a new, highly automated distribution facility in Brisbane, Queensland, and $4.5 million on a new contract logistics facility in Sydney, New South Wales. Additional capex will be incurred in the second half, with further spend on these two projects alone in the 2018 financial year estimated at $43 million, Ebos said. 

“Our major capital projects in both Australia and New Zealand have all seen excellent progress over the period and remain on-track and budget. These investments are a key part of our strategy to provide the most efficient warehousing and distribution facilities for our expanding portfolio of businesses," said Davies.

The board declared an interim dividend of 33 cents per share, up 10 percent from a year earlier, payable on April 6 with a March 16 record date.

Ebos shares last traded at $17.16, and have shed 5.3 percent over the past year. 


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