Dechra Pharma swings to loss ahead of takeover by EQT

(Alliance News) - Dechra Pharmaceuticals PLC on Thursday said it swung to an annual loss as it lamented high inflation and cost of sales, despite growth in all pharmaceutical product categories.

The Northwich, Cheshire-based veterinary drug maker said revenue grew to GBP761.5 million from GBP681.8 million a year before, up 12% on a reported basis, and 5.5% higher in constant currency.

The company cited growth in EU pharmaceuticals, while its performance in North America took a hit from US wholesaler de-stocking. "Territories such as the UK, France and Germany showed positive signs of increased demand, contributing to a record sales month for the EU Pharmaceuticals segment in June 2023," it said.

Despite revenue growth, the firm swung to a pretax loss of GBP36.1 million from a profit of GBP77.6 million, as cost of sales increased 13% to GBP335.2 million from GBP297.0 million. "Rising inflation, unpredictable country specific dynamics within some of our key European markets, and ongoing integration of the two US acquisitions made in July and August 2022 all required navigating," Dechra explained.

Its total dividend amounted to 12.50 pence, down from 44.89p in the previous year, as Dechra decided to forgo the payment of a final dividend given its impending takeover.

Dechra said it expects its takeover by EQT, which is a Swedish private equity firm, and Luxinva SA, which is controlled by the sovereign wealth fund of the United Arab Emirates, to complete in late 2023 or early 2024. The offer values Dechra shares at 3,875 pence each, or about GBP4.5 billion.

Dechra shares were 0.3% lower at 3,784.00 pence each on Thursday morning in London.

By Tom Budszus, Alliance News reporter

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