Exceptional charges dent Hikma's profits

Drugs developer Hikma Pharmaceuticals kept up its track record of doubling revenues every four years, but it will be less pleased with the slide in profits in 2011 as exceptional charges increased.

Profits before tax fell from $120.98m to $93.89m, after operating expenses soared. Group operating expenses grew by 24.5% to $276.7m, compared to $222.2m in 2010, with acquisition and integration related expenses rising to $16.4m from $7.7m the year before while this time round the group did not benefit from a $7.18m gain on the revaluation of previously held equity interests like it did in 2010.

Profitability was also affected by an increase in employee wages and benefits across the Middle East and North Africa (MENA) region, the consolidation of the lower margin Multi-Source Injectables (MSI) business and the effect of foreign exchange movements on sales and raw material costs.

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Group revenues of $918m were up 25.6% on 2010's $730.94m, while organic revenue growth, which strips out contributions from recently acquired companies, was 7.6%.

Diluted earnings per share (EPS) fell from 50.2 cents in 2010 to 40.5 cents. Adjusted diluted EPS dipped to 51 cents from 52.4 cents in 2010.

Said Darwazah, Chief Executive Officer of Hikma, predicted the group would put in a strong performance in 2012, "reflecting the investments that we have made across the group in 2011."

"With the benefit from the Moroccan and Sudanese acquisitions we are expecting overall Branded revenue growth of around 20% in 2012. We expect continued inflationary pressure on MENA operating costs in 2012, which we aim to offset through new product launches and sales and marketing efficiencies. We expect gross margin and adjusted operating margin in 2012 to be broadly in line with 2011," Darwazah said.

The dividend for the year was 13 cents, equal to the previous year. Cash at the end of the year rose to $94.7m compared to $62.7m the end of the previous year.

Shares rose 0.19% to 773.50p by 08:32.

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