United Drug warns on profits

WEAK STERLING, falling cosmetics sales and a reduced hospital spend will hit first-half profits at medicines distributor United Drug, the company warned yesterday.

In a management statement issued to coincide with the group’s agm yesterday, United Drug said the sharp decline in the Irish, British and US economies had created “challenging trading conditions” for some parts of the business, but opened opportunities for others.

“Based on current trading and the weakness of sterling, the group expects results for the first half of the financial year (the six months ended March 31st) to be down, compared with a strong first half of 2008,” the statement said. “There is currently a lack of visibility on revenues in various parts of the business. However, the group is working to achieve a profit for the year at least in line with the prior year, on a constant currency basis.”

United Drug said that in its healthcare supply division, premium cosmetics and consumer goods have seen a significant fall-off in spending. It added that there are new opportunities in all of the divisions that deal with manufacturers, but said that curtailed hospital spending on equipment continues to hit its medical and scientific business.

It said there had been some delay in the release of packaging orders, particularly in the US market. Last month it announced a restructuring programme designed to streamline the business and to review costs across all parts of the business. It said these will result in once-off costs of €10 million this year and deliver savings of €7 million to €8 million a year to the group.