Dechra Pharmaceuticals hit by US supply issues, bad weather

10th Jul 2013 10:30

Dechra Pharmaceuticals said adverse weather and supply issues in the US affected trading in the third quarter.In an update for the year to end of June, the veterinary pharmaceuticals company said its US performance was impacted by third party supply issues for the ophthalmic and dermatology ranges.It offset strong trading in the fourth quarter.Nevertheless, group revenue was up 19% year-on-year, supported by a 65% increase in European Pharmaceutical sales. On a like-for-like basis, pharmaceutical revenue grew by about 5.0%.Chief Executive, Ian Page, said: "During 2013, we strengthened our position in the pharmaceutical segments and successfully integrated Eurovet into our business; a key aspect has been the strong performance of our branded lead pharmaceutical products. "We continue to increase our investment in our product development pipeline to support the delivery of our strategic objective of building a high margin, cash generative veterinary pharmaceutical business. Whilst the current financial year will remain challenging, we look forward to reporting another year of progress."Separately, the group announced the proposed disposal of its Services Segment business to Patterson Companies for 87.5m pounds. The company said the sale of the division would create a business focused on high margin, specialist products, operating in a global market with attractive long term growth prospects. The group will turn its focus to its branded veterinary products businesses and the pharmaceuticals businesses.The Services Segment includes National Veterinary Services, Laboratory Services and Dechra Specialist Laboratories.Dechra said it believes that the disposal is in the best interests of shareholders as it will provide additional resources to continue the development of the pharmaceuticals segment.Net cash proceeds will be used to reduce Dechra's net debt.Completion of the sale is currently expected to take place mid-August 2013.Shares fell 7.78% to 687.50p at 10:58 on Wednesday.RD