ii view: Hikma keeps a healthy pulse with solid first half

First-half results to 30 June

• Revenue up 4% to $1.73 billion (£1.28 billion)
• Core operating profit up 9% to $405 million (£300 million)
• Interim dividend up 6% to 38 US cents per share
• Ongoing $250 million share buyback programme
• Net debt of $1.69 billion, up from $1.39 billion in late December

Guidance:

• Continues to expect full-year 2026 currency adjusted revenue growth of between 2% to 4%
• Continues to expect full-year core operating profit of $720 million to $770 million, potentially up from last year’s $741 million

Chief executive Said Darwazah said: “I am pleased to report a solid first half with performance in line with our expectations, including 9% growth in core operating profit, and I am encouraged by the positive momentum we are seeing across the organisation.

“We have made good progress against our strategic priorities in the first half of 2026, launching new products, strengthening our pipeline, signing new partnerships and optimising our manufacturing operations - all initiatives that will support long-term growth.”

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ii round-up:

Hikma Pharmaceuticals (LSE:HIK) supplies over 825 medicines and products globally.

Products fall into the three categories of injectables, generics and branded medicines.

Therapeutic categories include anti-infectives, cardiovascular, central nervous system, diabetes, oncology, pain management and respiratory.

For a round-up of these latest results, please click here.

ii view:

Founded in Jordan in 1978, Hikma today employs around 9,400 people. The UK-headquartered company operates 29 manufacturing plants, many in North America. Its three Research and Development centres are in the US, Jordan and Croatia.

Hikma highlights itself as a top three provider of generic sterile injectables by volume and a key supplier of non-injectable generic medicines in the US. Injectables accounted for most sales during this latest half year at 40% followed by generic medicines or the RX division at 30%, and branded medicines most of the 30% balance.

Geographically, North American sales continued to dominate during this latest period at 55%. That was followed by the Middle East and North Africa at 36%, with Saudi Arabia and Algeria representing major markets, while sales in Europe and the Rest of the World were at 8%, and the UK 1%.

For investors, continuing management expectations for current full-year sales growth of up to 4% sits below a three-year average of 10%. A near one-fifth increase in R&D costs during this latest period continues to weigh on profit hopes. Elevated energy prices resulting from the Middle East conflict could also weigh on profits going forward, while US President Donald Trump’s tariffs and ongoing government pressures to reduce drug sale prices have not gone away.

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More favourably, a 15% increase in branded related sales beat City forecasts during this latest period. Previous management changes and a renewed focus on R&D and new products underwrote 48 product submissions during the half year. The company offers a diverse range of products across multiple geographical locations. A previous, if aborted, takeover approach should not be forgotten, while an estimated future dividend yield of close to 4% also offers attraction.

In all, a relatively tepid annual sales forecast and potential for core operating profits to retreat year-over-year continues to generate caution. That said, a consensus analyst estimate of fair value sat at over £18.50 per share supports current optimism in the City.  

Positives:

• Diversity across products
• Attractive dividend yield (not guaranteed)

Negatives:

• Currency translation can hinder performance
• Key Middle Eastern markets can suffer political instability

The average rating of stock market analysts:

Buy