EBOS shares rally after Q1 earnings leap 15 per cent

Shares in distribution company EBOS rallied after the company produced strong first quarter earnings. Photo / Getty Images

Shares in EBOS Group rallied after the Australasian distributor of healthcare products said its earnings gained 15 per cent in the first quarter.

However, the company said, there was no certainty that this would last for the course of its financial year to June 30.

"Trading for the first quarter of 2021 has seen the group continue to record impressive growth with group revenue for the first quarter above last year by 6.5 per cent," chief executive John Cullity said in speech prepared for today's annual meeting.

"Growth in underlying EBITDA and net profit for the first quarter is above last year by 9 per cent and 15 per cent, respectively," he said.

"We are very aware of the unpredictable environment we are all experiencing so it's pleasing that our first quarter results are positive and exceeded our internal expectations, however, there can be no certainty that growth will continue at these levels for the remainder of the year," he said.

Cullity said it was too early to provide a forward earnings guidance, given the uncertain environment.

The group had significant scale and leading market positions, a strong balance sheet, and was well placed to respond to any challenges that may emerge, he said.

EBOS posted a net profit after tax of A$162 million ($175.1m) for last financial year, which was up 18 per cent compared to A$137.7m a year earlier.

The company's shares closed at $26.03, up 64c or 2.5 per cent on Monday's closing level.

Since balance date, EBOS said it had bought Australian medical equipment maker Cryomed Aesthetics for an initial purchase price of $14.1m.

"Shareholders can expect to see EBOS undertake further acquisitions in the devices market as we target those therapeutic areas we believe will provide the best returns for our investment," the company said.

Salt Funds managing director Matt Goodson said the update was better than analysts' expectations.

"With the first quarter profit up 15 per cent, year-on-year, EBOS has obviously been trading well," he said.

Cullity said in his address that the company's healthcare business experienced unprecedented demand in March due to Covid-19 developments.

At that time, the company's Australian wholesaling business Symbion, along with the other members of the National Pharmaceutical Services Association, distributed more than 70 million PBS (state-subsidised) medicines across Australia - up 70 per cent compared with the same time last year.

"EBOS' significant investment over recent years in its Australian wholesale distribution network positioned us very well to meet this increased demand," he said.

During this same period, the animal care business also continued to make a strong contribution to the financial performance.

Following this surge in demand, EBOS' businesses generally experienced lower levels of trading activity during the final quarter of 2020, as a consequence of government Covid-19 control measures.

"However, given the essential nature of our product offering, our sales volumes remained relatively resilient and trading conditions generally returned to normal levels in June," the company said.