Hikma reiterates revenue guidance

Revenue from generic drugs fell in the first half at Hikma Pharmaceuticals but branded products more than picked up the slack.Overall, revenue in the first half of 2012 rose 34.8% to $532.3m from $394.8m the year before, helped by contributions from recent acquisitions. Organic revenue growth was still a solid 7.6%, however.Branded revenue growth of 24.6% reflected strong demand across markets in the Middle East and North Africa, with organic growth of 12.8% in this region. The Branded business remains on track for around 20% full-year revenue growth, with gross and adjusted operating margins broadly in line with 2011, the group said.The Injectables business delivered 94.0% revenue growth, with organic revenue growth of 25.7%, and adjusted operating margin of 22.0%. As for the Generics drugs business, that has been weighed down by additional compliance requirements at its oral dosage facility at Eatontown, New Jersey, after the group received a warning letter about the plant from the US Food and Drug Administration. Pricing pressures have also been hitting sales of Hikma's generic drugs. Generics revenue decreased by 27.0% to $55.8m. Full-year revenue guidance for this division has been revised to around $115m.Profit before tax climbed to $57.84m from $39.87m in the first half of 2011. Earnings before interest, tax, depreciation and amortisation (EBITDA) improved to $103.7m from $70.5m.The gross margin edged up to 44.0% from 43.7% in the first half of last year while a significant increase in Injectables margins more than offsets lower margins in the Generics business, pushing the group's underlying operating margin up to 15.4% from 15.1%."We have had a strong start to the year in our Branded and Injectables businesses," said Said Darwazah, Chief Executive Officer of Hikma."In our Generics business, where operations have been disrupted by additional compliance work, we expect sales to gradually improve in the second half," he added.The interim dividend has been lifted to six cents - around 3.8p - from 5.5 cents last year. JH