# Dechra Pharmaceuticals trading environment has been more volatile and challenging

- Link: https://www.directorstalkinterviews.com/dechra-pharmaceuticals-trading-environment-has-been-more-volatile-and-challenging/4121119722
- Published: 2023-05-22T07:59:12+01:00
- Author: Emily Johnson

**[Dechra Pharmaceuticals PLC](https://www.directorstalkinterviews.com/ftse-company/dechra-pharmaceuticals/dph.l)**(
LON:DPH) has issued today the following unaudited trading update in respect of the
financial year ending 30 June 2023.

The Board is confident that Dechra’s end customer demand has continued to be ahead
of the animal health market in its major geographies. However, the trading environment
during the period January to April 2023 has been more volatile and challenging than
anticipated when the Board reported its interim results on 27 February 2023.

In the US, the impact of the now widely reported de-stocking by US wholesalers has
been deeper and longer than initially expected and had a material impact on Q3 (
January to March 2023) performance, although there are encouraging signs that this
is now re-bounding. We have continued to see strong end customer demand as evidenced
by product sales from wholesalers out to veterinary clinics, independent data for
which shows year-on-year sales are up approximately 11%^(1) during the period January
to April 2023.

A similar de-stocking pattern has also been experienced in the UK during April 2023,
due to certain wholesalers managing financial year-end inventory levels, although
order patterns are beginning to show signs of normalising. In the rest of Europe,
the market appears to be slowing in response to the changing macro-economic environment
and country specific dynamics.

Accordingly, the Board confirms that full year underlying operating profit for the
year ending 30 June 2023 will be below £186 million, the guidance provided within
the Company’s interim results announced on 27 February 2023^(2, 3).

The Board is confident that the Group remains very well positioned to continue to
grow over the medium and longer term despite the unprecedented and, by nature, short
term trading headwinds. The fundamentals of the business and strategy remains strong,
our underlying markets remain in structural growth, we continue to grow in our chosen
markets and we have an established, highly experienced and focused management team.
Our strategy is robust, including  a very attractive development pipeline of new
products to underpin our future growth, supported by a strong balance sheet.

Dechra Pharmaceuticals PLC remains in discussion with EQT X EUR SCSp and EQT X USD
SCSp, each represented by its manager (gérant) EQT Fund Management S.à r.l. (collectively
referred to as “EQT”) regarding a possible all-cash recommended offer of 4,070 pence
per ordinary share. As announced on 11 May 2023, in accordance with Rule 2.6(a) 
of the City Code on Takeovers and Mergers (the “Code”), EQT is required, by not 
later than 5.00 pm (London time) on 2 June 2023 either to announce a firm intention
to make an offer for Dechra in accordance with Rule 2.7 of the Code or to announce
that it does not intend to make an offer.  

As such the Company remains in an offer period as defined by the Code and is restricted
in providing further guidance at this stage.

There can be no certainty that any firm offer will be made for Dechra. A further
announcement will be made as appropriate.

Notes

1.    Source: Animalytix Customer Transactional (ACT) Records

2.    Immediately prior to the announcement of the Company’s interim results on 
27 February 2023 the analyst expectations range for the underlying operating profit
for the year ending 30 June 2023 published on the Company’s website was £186 million
to £199 million

3.    The revised guidance provided in this announcement also constitutes a profit
forecast for the purposes of Rule 28.1 of the Code and the Company will provide 
the requisite directors’ confirmation statement pursuant to Rule 28.1(c)(i) should
any announcement regarding a firm offer for the Company be made pursuant to Rule
2.7 of the Code

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