Ebos lifts first-half profit 12% on healthcare and pet care growth, refinancing

Wednesday 25th February 2015

Ebos, the healthcare and animal care products company, reported a 12 percent 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, or 35.2 cents a share, in the six months ended Dec. 31, from $49.4 million, or 34 cents, a year earlier, the Christchurch-based company said. Sales rose 6.1 percent to $3.1 billion.

Ebos transformed itself with the June 2013 purchase of Australian pharmaceutical wholesaler and distributor Symbion, and now gets 82 percent of earnings in Australian dollar. It continued making acquisitions in the latest half, buying a stake in Australia's pharmacy retailer Good Price Pharmacy Warehouse and the BlackHawk Premium Pet Care pet food 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,” chief executive Patrick Davies said in the statement.

The company will pay a first-half dividend of 22 cents a share, up 7.3 percent from a year earlier. Ebos shares began rising immediately trading began on the NZX this morning, trading 3.1 percent higher at $9.90.

Ebos's pretax 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 calendar 2015. 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. On that basis, profit climbed about 12 percent in the first half.

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

Net finance costs fell almost 19 percent 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. The company's debt is split 80 percent in Australia, 20 percent in New Zealand.

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

BusinessDesk.co.nz

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