Shares in Alliance Pharma closed 10 per cent down today after it announced uninspiring profit growth in its interim results.
In the six months to 30 June, revenue grew 10 per cent to £45.5m, while gross profit went up 12 per cent to £32.4m.
However, underlying before tax profit only made marginal gains of two per cent to £12.1m, while underlying earnings rose one per cent to £13.8m.
The dividend was slightly raised by 10 per cent up to 0.487p per share.
Why it's interesting
Alliance is in the middle of a considerable reshuffle this year. It has reorganised its Chinese operations to focus on its Nutraceutical, Kelo-cote and Nizoral businesses, and hopes its recent acquisition of antifungal medicine Nizoral from Johnson & Johnson will boost scale in its Asia Pacific trading.
It's also disposed of its investment in a joint venture with Unigreg for £2.9m, which has garnered it a profit of £1.5m.
High costs have weighed on the business, but Alliance said its UK launch of Xonvea, used for morning sickness, could raise revenues in the fourth quarter.
Shares in the business soared to a record high in June after its license for a separate morning sickness drug, Diclectin, was approved by a regulator.
What Alliance Pharma said
David Cook, Alliance’s non-executive chairman, said:
The first half of 2018 has seen continued transformation of the Alliance business, with the creation of an Alliance office in the US, the acquisition of Nizoral bringing increased scale and opportunities for us in the Asia Pacific region and the recent UK approval of Xonvea, offering additional opportunities for growth in the medium term.
The second half of the year has started well. Our good underlying cash generation, coupled with the opportunities from our enlarged portfolio of International Star brands, mean we are well positioned to pursue future growth both organically and through acquisitions in line with our strategic plan.