Ebos meets guidance as first half profit more than triples, Aussies take over

Mark Waller

Ebos Group [NZX: EBO] said first-half profit more than tripled, meeting its guidance after the acquisition of Symbion, and said its top executives would be replaced by managers of the Australian drug distributor and wholesaler.

Profit was $49.9 million in the six months ended Dec. 31, up from about $15 million a year earlier, the Christchurch-based company said in a statement. Sales jumped to $3 billion from $755 million. Ebos forecast a profit of $48.7 million on sales of $3.17 billion at its annual meeting in October.

The $1.1 billion cash and scrip Symbion purchase was a game-changer for Ebos, more than tripling annual revenue in a deal that gave Symbion's owner Zuellig Group a cornerstone 40 percent stake in the New Zealand business and adding to the Hong Kong-based group's 30 stake in chemist chain PharmacyBrands.

The results announcement marks a changing of the guard at the company that has grown through acquisitions to include medical products distribution, pet products and now pharmaceuticals with 19 acquisitions in 12 years. The shares rose 3.1 percent to $10 and have gained 156 percent in the past five years, almost twice the gains of the NZX 50 Index. It also listed on the ASX in the latest year.

Chairman Rick Christie will retire at the company's annual meeting in October 2015, after 10 years in the role and will be replaced by chief executive Mark Waller.

In turn, Waller will be replaced as CEO by Patrick Davies, who had been CEO of Symbion and chief financial officer Dennis Doherty, who held off retiring pending the Symbion purchase, will be replaced by Symbion CFO John Cullity.

Christie called the changes "the right mix of continuity to maintain our strategic director, proven operational talent and a seamless transition, with an even stronger growth focus."

Ebos will pay a first-half dividend of 20.5 cents a share on April 4, with a record date of March 14. That's up from 17.5 cents a year earlier.

The company operates as two main divisions, healthcare and animal care. In the first half, revenue from healthcare soared to $2.8 billion from $673 million a year earlier, reflecting revenue from Symbion, while profit climbed to $52.2 million from $12.8 million.

Animal care, made up of the Procter & Gamble pet care, Eukanuba and IAMS pet food, and the Vitapet grocery brands acquired with the 2011 acquisition of Masterpet Group for $105 million plus debt, lifted sales to $177 million from $81 million and profit gained to $9.5 million from $6.4 million.

Gearing was a relatively mild 26.7 percent and Ebos said it has $390 million in undrawn bank facilities, giving it "significant headroom for future growth."

The company said it assessed "a number of acquisition opportunities" in the first half though none met its shareholder returns criteria.

With the addition of Symbion, Ebos got A$2.09 billion of its revenue across the Tasman, while New Zealand sales accounted for $649.6 million. Profit from Australia was A$41.7 million and from New Zealand was $14.8 million.

That means the strength of the kiwi dollar against the Australian dollar is a major component of its results. The kiwi was recently at 91.95 Australian cents from 81.44 cents a year ago.

The currency "remains on our radar," Ebos said in presentation slides today. It gave no specific guidance for the full year while noting that the trading mix has traditionally been skewed 52 percent-48 percent between the first and second halves.

(BusinessDesk)

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