Ebos forecasts 10% lift in 2018 earnings

Ebos Group, which posted a record profit in 2017 driven by acquisitions and sales growth, says earnings will rise about 10 percent in the current year after a strong first quarter for its healthcare and animal products divisions.

Chief executive Patrick Davies told shareholders at their annual meeting in Christchurch that the company "made a positive start to the first quarter of the 2018 financial year, with growth from both our healthcare and animal care segments."

"On the basis of our current trading performance, we expect constant currency, underlying ebitda for the 2018 financial year to grow by approximately 10 percent on the prior year," he said.

Underlying earnings before interest, tax, depreciation and amortisation rose 9.6 percent to $241 million on a constant currency basis in 2017 and today's forecast suggests ebitda would rise to about $265 million this year. Underlying earnings excluded transaction costs from acquisitions last year.

Ebitda has climbed 38 percent in the four years since Ebos acquired the Symbion pharmaceutical wholesaler and distributor in Australia in 2013 for $1.1 billion cash and scrip in a deal that gave Symbion's owner Zuellig Group a cornerstone 40 percent stake and saw 2014 profit almost triple. Since then it has invested $470 million on acquisitions and capital expenditure.

"Today we are uniquely positioned as the largest and most diversified Australasian marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products," chair Mark Waller said.

The company has many businesses that operate "in highly competitive and regulated markets in New Zealand and Australia," he told shareholders. "Government healthcare funding remains constrained and we expect this to continue."

Ebos is currently awaiting the final report from the Australian government's independent review into pharmacy remuneration and regulation, which it hopes will be amended from its interim version.

"We have expressed our disappointment that the interim report failed to recognise the wholesale industry's proposals to ensure the longer-term sustainability of the industry," he said. "Our view is that there are some relatively minor changes to the funding model which could be implemented to better reflect the importance of the role wholesalers play in the industry and achieve a more sustainable funding arrangement."

In May, Ebos announced the acquisition of HPS, Australia's largest provider of outsourced pharmacy services to hospitals, for A$154 million, adding to a healthcare division that stretches from pharmacies to consumer products, healthcare and contract logistics. It bought a majority stake in Terry White Group last October, merging that business with its Chemmart unit to create one of Australia's largest chains of pharmacies.

"The acquisition of HPS has given us market leadership in the provision of outsourced pharmacy services to Australian hospitals and provides the platform for further revenue growth across HPS' extensive network of clients," Davies said today.

Ebos shares were unchnaged at $17.40 and have gained 4.2 percent this year.

(BusinessDesk)