Dechra Pharmaceuticals buys wisely as acquisitions boost revenues

Oliver Gill
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Dechra Pharmaceuticals has been boosted by favourable exchange rates (Source: Getty)

Shares in animal drugmaker Dechra jumped over six per cent in early trading morning after it revealed "significant growth" in its annual trading statement.

The figures

The hard data will come when the FTSE 250 firm releases its full results, but in the trading update, the firm announced group revenue had grown by 34 per cent at constant exchange rates. This was an increase of 56 per cent when taking into account forex tailwinds.

17 January 2017 @ 8:30amDechra Pharmaceuticals (DPH)

North American operations grew by a whopping 112 per cent on a constant currency; that's 152 per cent in actual terms.

Read more: Merlin Entertainments poaches finance chief from Dechra

Europe was was more muted, but revenues still grew by 12 per cent before currency fluctuations and 29 per cent once they were included.

Why it's interesting

Growth at the firm has been driven by four key acquisitions during the year – Genera, Putney, Apex and Brovel. When these are stripped out the company has still performed well, growing at seven per cent on a constant currency basis.

The worry for investors of firms that are particularly acquisitive can be whether the synergies can be captured. Both management and analysts concluded Dechra had been successful.

Dechra also produces drugs for pets

The company concluded the revenue contributions from the four purchases were "ahead of the board's expectations".

Brian White, an analyst at Cantor Fitzgerald, said: "Management has executed extremely well to date following a strategic plan to drive growth on several fronts."

Read more: Dechra pharmaceuticals reports rise in pre-tax profits from £21.4m to £25.8m

​He added that there was probably more to come from the Northwich-based firm.

Despite acquiring four businesses in FY16, there remains room for further corporate activity, which we hope is directed at further expanding the companion animal business.

What the company said

Chief exec Ian Page was glowing on the firm's performance: "Our underlying business and acquisitions have performed well, resulting in significant growth in the first half of the 2017 financial year."

The group pipeline has delivered new products and our global presence continues to increase. We remain confident in our strategy, our future prospects and our expectations for full-year performance.

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