Dechra Pharmaceuticals Share Discussion Threads

[cambium] 15/3/2010 13:46

afternoon John

[johnrxx99] 10/3/2010 09:20

Decided to join. On 200 day ma and expecting a bounce.

[shroder] 09/3/2010 17:48

Large worked 'C' trades after hours could indicate seller out if the way.

[shroder] 04/3/2010 16:32

22k of shares on at 450 in the auction so not done yet, that's about half today's volume.

[shroder] 04/3/2010 16:13

You would think they would try and place the stock rather than dribble it out damaging their own holding.

Cambian, chk out SAND, unloved at the mo.

[cambium] 04/3/2010 16:11

hope so, onwards and upwards thinking about ABC and IDH too atm

[shroder] 04/3/2010 16:07

Has the selling stopped??

[shroder] 01/3/2010 08:39

Ex-div this week, 3.3p

[cambium] 26/2/2010 15:40

decided to joinyou guys here

[shroder] 23/2/2010 13:58

There's been a seller at this level for a while so not sure the dip is down to the figures which looked good.

Picked a few up here.

[wjccghcc] 23/2/2010 13:53

Adjusted operating profit stripping out the FX was up 8% which probably gives a truer picture. They do however seem more optimistic about H2.

[shuisky] 23/2/2010 13:09

Hi David,

Its great to have you on board looking at these things. I'll try and pick up on your points.

Firstly, Gross Margins have improved from 20.61% to to 21.25%

Secondly, Operating margins have fallen but this is because corporate and R & D costs have increased. They made it clear at the finals that development spend was going up to drive future growth. This is good. Indeed, you can see they reference the 1.2m in costs to expand in the US. I'm also ok with 418k tech payment treated as an excpetional because it is not recurring.

What is more circumspect is Vetoryl sales at the lower end of expecations & the weakness in growth in European pharma. If you look at the operating profits by segment (note 2) you can see that (ignoring the increased pharma R & D cost) the increase in segmental op profit is from 15,231 to 16,403 ie 1,172 but 772k of this is due to services. So most of the profit growth is due to cost efficiencies at NVS, this will be difficult to carry forward IMHO.

Of course, we should expect too much in a recessionary year, but nevertheless it does mean that there will be pressure on DPH to deliver.

On closer inspection these are slightly disappointing results. The stock could tread water for a while whilst waiting for growth in Pharma (EU & US) to be confirmed. . The fall, IMHO, has absolutely nothing to do with the weather in January, and is more about the risk inherent in the market understanding that they are not quite delivering now (Vetoryl etc) but are set too in future. A lot of the growth, IMHO, will depend on new product launches and Vetoryl expansion in the US.

It is a solid result, but these are tricky numbers to interpret.Not least the finance income/expenditure movements, which are losing me for the moment.


In my experience, it is common for forecasts to ignore amortisation, but it is not universal.

[wilmdav] 23/2/2010 11:49

Marked up 3% initially and now down Ed: 3.2% (1.0pm). Movements at this stage probably based more on figures than text. Adjusted eps up 31.6%. Basic up even more at 36.8% - fantastic. Oh but adjusted operating profit only up 1.4% and unadjusted down by 6.4%. What's going on?

Operating profit adversely affected by f/ex movements to the tune of £0.8m but finance income benefited by £2.2m. So PTP flattered by net benefit of £1.4m.

Exceptional item: Payment to acquire technology for R&D programme - £0.418m.
Treatment of this as an exceptional item struck me as questionable. Maybe the market felt that way too.

Finance expense down £2.5m (£4.370m - £1.857m) boosting PTP. Not currently sure where all this reduction comes from - seems a lot to be explained by lower borrowings. Ed:It is explained by reduced borrowings.

Finance income up from £2.255m to £2.765m but £2.2m of the latter is f/ex translation.

Tax rate down. Taxation lower by £0.54m in spite of PTP £2.49M higher.

All in all, figures suggest underlying performance is not as rosy as it first looked.

The above might represent a short term trader's view or that of someone conversant with figures but not overly knowledgable about the company. The latter description fits me quite well and my initial reaction on seeing these figures at 8.10am was to consider selling with a view to buying back later. I didn't because I have acquired as sense that this company has got more going for it than one half year's figures might suggest. Indeed that view is supported by the text. My expectation is that we will see a larger than usual increase in H2 over H1.

Shuisky

You might be able to clarify a couple of points, one of which is general.

The £2.2m f/ex benefit to finance income. Am I correct to assume this translation relates solely to interest earned during the course of the year on cash held in foreign currencies?

Results show total amortisation of £4.029m (cash flow statement), of which £3.557m is amortisation of acquired intangibles (income statement). It is common for companies to adjust for the latter, as PDH have done. Ed: But do analysts's earnings forecasts ignore amortisation of intangibles?

Ed: Presumably revenue has also benefitted from currency movements, although there is no mention of it.

[gbh2] 23/2/2010 10:59

My point exactly, everyone does pick out what they consider to be the most important points!

[shuisky] 23/2/2010 09:56

...but only if they selectively pluck out what they want to read, in the way that you did.

[gbh2] 23/2/2010 09:04

My point was that the figures speak for themselves but that one paragraph is what many will remember!

[shuisky] 23/2/2010 09:00

gbht2

No.

Please dont selectively quote from the statement. This is the full statement on the issue...

'Footfall in veterinary practices throughout January 2010 was significantly reduced due to the adverse weather conditions which has had a temporary knock-on effect on Dechra's trading within the UK. However, this is not expected to have a material effect on management expectations for the second half. '

The bad weather has a temporary effect, inventory gets run down and then plays catch up as the weather improves. They are clearly seeing this already in place or they wouldn't be telling you that the effect is not material.

[gbh2] 23/2/2010 08:46

Figures look OK but I suspect the following comment will not help the SP:

"Footfall in veterinary practices throughout January 2010 was significantly reduced due to the adverse weather conditions which has had a temporary knock-on effect on Dechra's trading within the UK."

EDIT: I'm not too happy with the almost glib Q&A re future possible pitfalls!

[shuisky] 23/2/2010 07:51

Am just looking at results now and trying to find out what is new following the trading update on Jan 12

'Footfall in veterinary practices throughout January 2010 was significantly reduced due to the adverse weather conditions which has had a temporary knock-on effect on Dechra's trading within the UK. However, this is not expected to have a material effect on management expectations for the second half. '

So the bad weather is not going to have a material effect.

Gross Margins are higher, as are adjusted PBT margins, although this is mainly due to debt reductions. Their is the usual seasonal cash outflow.

Vetoryl US sales could be better, but the diets are performing very well..

'Sales of both our therapeutic and life stage diets have outperformed the market due to an improved product range, new product launches, competitive pricing and a focused sales and marketing effort.'

The outllook is showing signs of growth returning...


'Despite the continued economic uncertainty, there were indications of volume growth starting to return to the market towards the end of the reporting period'

Looks like revenues will beat consensus. A very solid update, suspect we are going higher. There is a 10% hike in the divi.

[gbh2] 05/2/2010 11:20

Good to see a flight to safety :)

[shuisky] 04/2/2010 13:17

And now again!

Sovereign default risk going up is causing weakness in equity markets, but why on earth they are inordinately selling stock in an animal pharmaceutical company is beyond me! DPH have already proved they can generate growth through the economic cycle.

[volsung] 22/1/2010 09:46

Time to add

[gbh2] 15/1/2010 17:32

One of the advantages of having their own manufacturing facility is that they can run with very low stock levels!

[shuisky] 15/1/2010 12:53

There is no mention of what you are suggesting in the last update for the period up until end December.

[mcartdon] 15/1/2010 11:49

mine like every vets has been virtually shut over the last month will dent drug sales 1 st q -------------- looking to cut back stocks and orders