Ebos posts 15% gain in full-year profit, driven by sales, margin growth in Australian healthcare

Wednesday 26th August 2015

Ebos Group, the healthcare and animal care products company, posted a 15 percent gain in full-year profit, led by increased sales and an improved margin from its Australian healthcare businesses.

Profit rose to $105.9 million in the 12 months ended June 30, from $92 million a year earlier, the Christchurch based company said in a statement. Sales climbed 5.4 percent to $6.1 billion, the first time revenue has exceeded $6 billion. Profit exceeded the $99.5 million forecast from brokerage Forsyth Barr.

Ebos transformed itself with the June 2013 purchase of Australian pharmaceutical wholesaler and distributor Symbion and the latest results "reflect the weight of that investment", chief executive Patrick Davies said today. The company will pay a final dividend of 25 cents a share, making 47 cents for the year, a 15 percent gain on the previous year, and Davies said Ebos has the balance sheet strength to continue making acquisitions.

"I'm very confident about the year we're in," Davies told BusinessDesk. "The group is so well placed on the back of this result to continue to pursue external opportunities, with the cash generation of this company, existing banking arrangements and a shareholder base that has shown they will support us if opportunities come along."

The company will give firmer guidance for the current year at its annual meeting on Oct. 27. Operating cash flow in the latest year rose almost 20 percent to a record $133.8 million. Gearing fell to 23.2 percent from 24.4 percent.

The company bought a stake in Australia's pharmacy retailer Good Price Pharmacy Warehouse and the BlackHawk Premium Pet Care pet food business in the 2015 year, while opening a pharmaceutical distribution centre in Melbourne and winning a state-wide contract to supply medical consumables to public hospitals in New South Wales.

Healthcare, which accounts for more than 90 percent of group revenue, lifted sales by 5.1 percent to $5.69 billion and earnings before interest, tax, depreciation and amortisation gained 11 percent to $170 million. Of that, $4.4 billion of sales was generated in Australia, up 5.1 percent on the year, while earnings across the Tasman gained 12 percent to $137.5 million. New Zealand sales rose 5.1 percent to $1.28 billion and Ebitda gained 8.1 percent to $32.7 million.

Davies said healthcare is benefiting from its diverse portfolio of businesses, ranging from hospital services and supply through to pharmacies and distribution. Some margin improvement came from sales of its own branded products, which are typically more profitable than just distribution, and the company also squeezed out profit "through technical improvements" to its businesses.

Animal care sales rose about 11 percent to $375.2 million, including eight months contribution from BlackHawke, and Ebitda rose 26 percent to $37.1 million. Some 83 percent of sales and 67 percent of earnings come from Australia.

Ebos shares jumped 5.7 percent to $11.10 and have gained 11 percent in the past 12 months, while the S&P/NZX 50 Index gained 8.3 percent. The stock is rated a 'buy' based on the consensus of five analysts polled by Reuters.

BusinessDesk.co.nz

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