UDG Healthcare pulls divi, guidance as Covid-19 set to hit H2

(Sharecast News) - UDG Healthcare said on Wednesday that trading in the first half was "strong" but that the second half was set to be hit by the Covid-19 outbreak, as it cancelled its dividend and withdrew guidance.
In the first half to the end of March 2020, constant currency pre-tax profit was "well ahead" of the same period last year, the healthcare services provider said, reflecting good underlying growth and the benefit of acquisitions made in 2019.

However, the second-half performance is expected to be impacted by the virus outbreak, with lower activity levels than previously anticipated.

UDG said it was withdrawing its constant currency earnings per share guidance for FY20, announced in its first-quarter trading update in January, "given the ongoing uncertainty and near-term challenges presented by the Covid-19 outbreak".

In addition, the interim dividend has been suspended. The board will keep this decision under review in the financial year as the effects of the virus become clearer, it said.

UDG said had adopted cost control measures to mitigate the potential fallout from the pandemic. These include the reduction of appropriate variable costs; tight control of discretionary expenditure; a recruitment freeze; reducing freelancer expenditure; and a temporary reduction in labour including reduced working hours and furloughing of employees.

The board and senior executive team have also voluntarily agreed to take a 20% cut in their respective fees and base salary for at least the next three months.

Chief executive Brendan McAtamney said: "UDG Healthcare is a well-diversified business and we have delivered a strong first half performance, driven by the performance of both Ashfield and Sharp. Our balance sheet remains robust and we are taking a number of decisive actions to support our people, our customers and the long-term future of our business.

"We have confidence in the market fundamentals that underpin our business, and I have no doubt the actions we are taking now will ensure we emerge from this crisis well placed to deliver renewed strong growth over the medium term."