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Ebos first-half profit gains 19% as acquisitions drive growth

Wednesday 24th February 2016

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Ebos Group, the animal and healthcare company that's been expanding via acquisitions, posted a 19 percent gain in first-half profit on growth in its healthcare and animal care units, allowing it to declare a bigger-than-expected interim dividend.

Net profit rose to $64 million, or 42.5 cents a share, in the six months ended Dec. 31, from $53.9 million, or 36.2 cents, a year earlier, the Christchurch-based company said in a statement. Sales rose 8.3 percent to $3.38 billion.

Ebos announced the $80 million purchase of New Zealand vitamin and herbal tea maker Red Seal last November, adding to a string of recent acquisitions including specialty pharmaceuticals firm Zest, Australian pharmacy retailer Good Price Pharmacy Warehouse and the BlackHawk Premium Pet Care pet food business. It has also opened a pharmaceutical distribution centre in Melbourne and won a state-wide contract to supply medical consumables to public hospitals in New South Wales. Acquisitions would help drive earnings growth in the full year, the company said

"The financial performance and growth in the first half has benefited from acquisitions and investments undertaken in previous periods which have now cycled through a full 12 months of ownership," said chief executive Patrick Davies. "We remain confident of delivering another year of double digit, constant currency, profit growth for our shareholders in 2016."

The company will pay a first-half dividend of 26 cents a share, up 18 percent from a year earlier. The record date is March 11, with the payment to be made on April 1. The dividend will be imputed to 25 percent for New Zealand shareholders and fully imputed for Australian investors. Ebos suspended its dividend reinvestment plan for the interim payment. Brokerage Forsyth Barr had forecast a dividend of 24.5 cents.

The healthcare division recorded a 13 percent gain in first-half earnings before interest, tax, depreciation and amortisation to $99.8 million on 8.2 percent revenue growth to $3.2 billion, Animal care ebitda rose 16 percent to $19.6 million as sales gained 10 percent to $210 million.

Ebos shares last traded at $13.70 and have gained 41 percent in the past 12 months. The stock is rated a 'hold' based on the consensus of five analysts polled by Reuters.

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