Ebos posts gain in full-year profit

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Healthcare and animal care products company Ebos Group [NZX: EBO] posted a 15% gain in full-year profit, led by increased sales and an improved margin from its Australian healthcare businesses.

Profit rose to $105.9 million in the 12 months ended June 30, from $92 million a year earlier.

Sales climbed 5.4% to $6.1 billion, the first time revenue has exceeded $6 billion. Profit exceeded the $99.5 million forecast from Forsyth Barr.

The Christchurch-based Ebos transformed itself with the June 2013 purchase of Australian pharmaceutical wholesaler and distributor Symbion.  The latest results "reflect the weight of that investment", chief executive Patrick Davies says. Ebos has the balance sheet strength to continue making acquisitions, he says.

"I'm confident about the year we're in," Mr Davies says. "The group is so well placed on the back of this result to continue to pursue external opportunities, with the cash generation of this company, existing banking arrangements and a shareholder base that has shown they will support us if opportunities come along."

A final dividend of 25c a share will be paid, making 47c for the year, a 15% gain on the previous year. The company will give firmer guidance for the current year at its annual meeting on October 27.

Operating cash flow in the latest year rose almost 20% to a record $133.8 million. Gearing fell to 23.2% from 24.4%.

The company bought a stake in Australia's pharmacy retailer Good Price Pharmacy Warehouse and the BlackHawk Premium Pet Care pet food business in the 2015 year. It also opened a pharmaceutical distribution centre in Melbourne and won a state-wide contract to supply medical consumables to public hospitals in New South Wales.

Healthcare, which accounts for more than 90% of group revenue, lifted sales by 5.1% to $5.69 billion and earnings before interest, tax, depreciation and amortisation gained 11% to $170 million.

Of that, $4.4 billion of sales was generated in Australia, up 5.1% on the year, while earnings across the Tasman gained 12% to $137.5 million. New Zealand sales rose 5.1% to $1.28 billion and ebitda gained 8.1% to $32.7 million.

Mr Davies says healthcare is benefiting from its diverse portfolio of businesses, ranging from hospital services and supply through to pharmacies and distribution.

Some margin improvement came from sales of its own branded products, which are typically more profitable than just distribution, and the company also squeezed out profit "through technical improvements" to its businesses, he says.

Animal care sales rose about 11% to $375.2 million, including eight months contribution from BlackHawk, and ebitda rose 26% to $37.1 million. Some 83% of sales and 67% of earnings come from Australia.

Ebos shares jumped 5.7% to $11.10 and have gained 11% in the past 12 months, while the S&P/NZX 50 Index gained 8.3%. The stock is rated a 'buy' based on the consensus of five analysts polled by Reuters.

(BusinessDesk)