UDG Healthcare to get shot in the arm from falling euro
The weak euro will provide a significant profit boost to Irish firm UDG Healthcare this financial year as it benefits from stronger sterling and a US dollar.
The company said it expects full-year earnings per share to rise by between 6pc and 8pc, after reporting what it said was a "strong" start to its financial year.
Shares in the company jumped more than 4pc in London, pushing its market capitalisation above £1bn (€1.32bn) for the first time.
Speaking to the Irish Independent, UDG chief financial officer Alan Ralph said that the final uplift will be higher due to favourable currency movements
"We're only three or four months into the new financial year and currency can be extremely volatile," he said. "But we'd expect about a 5pc-7pc benefit from the currency translation. That's about double the constant currency growth."
UDG Healthcare, which is headed by chief executive Liam FitzGerald, held its annual general meeting in Dublin yesterday. The company generates about 70pc of its business outside Ireland, primarily in the UK and the United States.
Its Ashfield unit operates in about 22 countries, and offers services including outsourced sales teams, event management, training and nurse educators to the healthcare and pharma sector.
UDG said trading in Ashfield in the three months to the end of December was strong, with profit in the division "well ahead" of the corresponding period in the previous year.
"Operating profit growth was particularly strong within the healthcare communications business, which benefited from the acquisitions made during 2014," it said.
UDG's Sharp packaging division also performed well, with a positive performance in the US in the second half of 2014 continuing into 2015, according to the company.
"Sharp Europe improved slightly but continues to face challenges," UDG said. "Divisional operating profits in the first quarter are significantly ahead of the prior year."
Mr Ralph said UDG will incur restructuring costs of about €10m this financial year. That arisen as the company integrates acquisitions in its healthcare communications arm, and restructures its supply chain business.
UDG also said that operating profits in its supply chain business have been impacted "broadly as anticipated" by changes in drug pricing in the Irish wholesale market, and are behind the corresponding period in the previous year.
Mr Ralph added that UDG Healthcare has no specific acquisitions in sight at the moment.
The company aims for acquisitions that can deliver a 15pc return over three years.