Dechra profits surge on pandemic pet care boom

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Dechra Pharmaceuticals, one of the biggest sellers of veterinary medicine, has emerged as a winner from the pandemic after spending by pet owners helped drive its annual profits up by almost two-thirds.

The FTSE 250 company is the latest to benefit as repeated lockdowns have prompted households to spend more on their pets, with chief executive Ian Page noting that the group enjoyed “above average” growth in most of its main markets.

“What is clear is that people have been spending more time with their pets and have therefore been more cognitive of their welfare, and with disposable income being higher than normal due to lockdown, expenditure per pet has increased,” Page said on Monday alongside the company’s latest results.

Dechra’s operating profits increased 63 per cent to £84m in the 12 months to June 30, while revenues rose 21 per cent to £608m.

Since early last year shares in the group have surged more than 65 per cent to a record, though they declined 4 per cent on Monday.

Analysts at Panmure Gordon said that recent trading updates had given investors “a good steer for today’s results” but “that’s not to detract, however, from what has been a strong performance”.

Dechra has launched a number of products since the turn of the year, including securing the rights to market Tri-Solfen, which provides pain relief for lambs, in Australia and New Zealand.

The group in March announced the launch of Mirataz, an ointment that helps cats with poor appetite to gain weight. Over the summer, Dechra acquired worldwide rights for Osurnia, which is used to treat inflammation of the outer ear in dogs.

Mirataz and Osurnia had delivered “good additional growth”, Dechra said on Monday. In total, acquired businesses contributed £24m in revenue for the year.

“The momentum and market penetration” was expected to continue into the next 12 months, Page said, adding that Dechra had identified “numerous strategic opportunities to strengthen our product portfolio and development pipeline”. 

The company increased its dividend by 18 per cent to 40.5p. Dechra also said that non-executive chair Tony Rice, who was appointed in 2016 after stints at BAE Systems, Saab Technologies and Telewest Communications, had decided to step down. He will continue until a successor is appointed.