Ebos profit grows to $272 million

Ebos chief executive John Cullity. Photo/Supplied

Ebos Group boosted annual earnings in line with its forecast even though revenue fell, as the pharmaceutical and animal health products company increased margins and benefited from acquisitions.

Underlying earnings before interest, tax, depreciation, amortisation on a constant currency basis increased 10.3 per cent to $272.4 million in the year ended June 30, in line with its forecast for 10 per cent growth. Revenue slipped 2.5 per cent to $7.6 billion. The company's healthcare business lifted its ebitda profit margin to 3.28 per cent from 2.9 per cent, while the animal care unit expanded margins to 12.08 per cent from 10.57 per cent.

Ebos has lifted ebitda 55 per cent since 2014 as it pursued acquisitions across New Zealand and Australia and has invested $33.6 million on in the past year. Its investments included a 14 per cent stake in Australia's leading digital medication management company MedAdvisor, the acquisition of New Zealand's leading footcare consumer brand Gran's Remedy, and the purchase of the management company of Australian pharmacy retail group Ventura Health. In addition, it integrated HPS, Australia's largest provider of outsourced pharmacy services to hospitals, which it bought at the end of last financial year, and launching its premium pet-food brand Black Hawk into the New Zealand market.

"We are pleased to once again report strong financial results," chief executive John Cullity said in a statement. The results "reflect a consistent positive momentum across both our healthcare and animal care businesses."

Ebos said it is confident of further profit growth in the current 2019 financial year on an underlying, constant currency basis. It will provide a performance update at its annual shareholder meeting on Oct. 16.

The company will pay a final dividend of 35.5 cents per share on Oct. 12, taking its annual dividend to 68.5 cents, ahead of 63 cents in 2017.

In its healthcare business, ebitda increased 10.4 percent to $235.9 million on a constant currency basis, as revenue fell 2.3 percent to $7.2 billion due to a $364 million reduction in hepatitis C medicine sales.

Animal care ebitda grew 9 percent to $49.8 million on a constant currency basis as revenue slipped 5.1 percent.

The company said Black Hawk sales in Australia grew 23 percent, and was one of Australia's fastest growing premium pet food brands with a leading market position in the pet specialty retail channel.

"Total animal care revenue declined for the year principally due to the business ceasing sales of low-margin wholesale products to a major Australian retail chain and discontinuing sales of other products upon the introduction of Black Hawk into New Zealand," Ebos said. "The business has strategically realigned its focus on developing its own brands to drive greater margin and shareholder value."

Ebos signalled plans to report earnings in Australian dollars in the future, given about 82 percent of its earnings are now generated in Australia and its results are significantly impacted by movements in the currencies.

The shares last traded at $21, having gained 13 percent so far this year.

- BusinessDesk