Ebos shows healthy rise in interim profit

CEO Patrick Davies.

Healthcare and animal care products company Ebos reported a 12 per cent gain in first-half profit after lifting earnings in both its divisions and refinancing debt on more favourable terms.

Profit rose to $53.9 million in the six months ended December 31, from $49.4 million a year earlier, the Christchurch company said. Sales rose 6.1 per cent to $3.1 billion.

Ebos transformed itself with the June 2013 purchase of Australian pharmaceutical wholesaler and distributor Symbion, and now gets 82 per cent of earnings in Australian dollars.

It continued making acquisitions in the latest half, buying a stake in Australian pharmacy retailer Good Price Pharmacy Warehouse and the BlackHawk Premium Pet Care petfood business, while opening a pharmaceutical distribution centre in Melbourne and winning a state-wide contract to supply medical consumables to public hospitals in New South Wales.

"Our business model continues to drive the profitable development of the group and is allowing us to continue to pursue opportunities for the benefit of our customers and shareholders," said chief executive Patrick Davies. The company will pay a first-half dividend of 22c a share, up 7.3 per cent from a year earlier. Ebos shares began rising immediately trading started on the NZX yesterday morning, trading 3.1 per cent higher at $9.90.

Ebos' pre-tax earnings would have been higher but for the impact of a strong Kiwi dollar against the Australian dollar, which reached a post-float high at the start of this year. The currency reduced earnings by about $2.2 million in New Zealand dollars, Davies said.

The company expects earnings growth in the second half to be at about the same rate as in the first half in constant currency terms.

The company's biggest business, healthcare, lifted sales by 3.7 per cent to $2.93 billion, driving an 8.5 per cent gain in earnings before interest and tax to $78.5 million. Its animal care unit had an 8 per cent lift in revenue to $191 million and a 7.5 per cent gain in earnings before interest and tax to $15 million.

Net finance costs fell almost 19 per cent after the company renegotiated a $402 million securitisation facility expiring in 2018 on improved margins, and extended its $260 million of term debt, also on improved margins.

Ebos' gearing ratio rose to 26.9 per cent at December 31 from 24.4 per cent six months earlier, mainly due to the acquisition of BlackHawk for $58.7 million. Even after that transaction, Ebos said it had "ample headroom in debt facilities to undertake further acquisitions".