HEALTHCARE SERVICES group United Drug said yesterday that profits for the year to the end of September will be in line with expectations but that figures will be hit by currency fluctuations.

The group, which distributes medicines and equipment to hospitals and pharmacies in the Republic, the UK and the US, said that 45 per cent of group profits for the year to date have been generated in sterling which has fallen in value by more than 16 per cent relative to the euro.

The group said it continued to experience slow trading conditions during its third quarter but that trading was still in line with expectations.

“Parts of the group continue to experience difficult trading conditions, against a backdrop of reduced consumer spending on discretionary items and lower levels of spending on hospital equipment, while other parts of the group are benefiting from an increased trend towards outsourcing of non-core functions by healthcare manufacturers,” it said.

“United Drug remains positive about the fundamentals of its core markets and its position within those markets despite the current extremely challenging economic environment. The group continues to explore opportunities to expand its business, both organically and through acquisition, and has a strong balance sheet to support its growth objectives,” it added.

United said that its restructuring programme had resulted in a one-off charge of about €14 million. However, it expects annualised savings of between €9 million and €10 million following the introduction of the cost-cutting programme.

Davy Research analyst Jack Gorman said United Drug had provided a “strong signal” on trading, while Bloxham Stockbrokers said the company was performing strongly, despite the sterling weakness.

“The future savings from the restructuring costs should help increase future cash flows while the group still maintains its appetite for growth,” Bloxham analysts noted.

The company’s share price closed flat at €1.89 on the Iseq yesterday.