United Drug aims to save €5m in Irish cost-base slash
United Drug is to slash €5m from its cost base in Ireland as its wholesale distribution unit continues to feel the pressure of reduced medicine prices.
In an interim management statement yesterday, the company said it planned to rationalise the Irish wholesale arm in a move that would cost it €9m. It said the move would deliver annualised savings of about €5m.
The company hasn't yet specified what the rationalisation will entail, but it's almost certain there will be some redundancies among its 700-strong workforce in Ireland.
United Drug added that despite the difficulties in its home market, operating profit for its financial year -- which ends next month -- would be ahead of last year, with all of the company's divisions trading well since April.
Its Irish operations account for less than 35pc of group profits. In its last financial year, United Drug recorded adjusted pre-tax profits of nearly €68m.
The company added that group revenues and operating profits for the nine months to the end of June were ahead of last year and in line with expectations and that there had been strong cashflow generation.
United Drug -- whose operations stretch from medicine distribution and pharmaceutical packaging to event management -- also said that there had been "particularly strong" development in its US businesses, where it operates sales and marketing as well as packaging units.
In the latest quarter, United Drug noted that revenue and profits at its sales, marketing and medical division were "well ahead" of the corresponding quarter last year, boosted by acquisitions and organic growth.
In its healthcare supply chain business, revenue and profits were lower in the last quarter year-on-year. It said this was primarily due to regulatory changes introduced in the past 12 months.
"Market share gains in our wholesale business along with new business wins in pre-wholesale have helped to offset much of the impact of these regulatory changes and a fall in the value of the Irish wholesale market of more than 4pc," said the company.
Profits at the packaging unit were also "well ahead" of last year during the last quarter.
Analyst Jack Gorman at Davy Stockbrokers said that United Drug had demonstrated a capacity to generate solid earnings in a very challenging trading environment.