Hikma reiterates guidance despite Iran war hitting costs

(Sharecast News) - Hikma Pharmaceuticals reiterated full-year guidance on Thursday, despite a rise in costs following the outbreak of war in the Middle East. Updating on first-quarter trading, the blue chip said all three of its business divisions - injectables, branded and Hikma Rx - were "performing well", with good demand across markets and portfolios.

Looking to the Middle East, a key market, Hikma noted that demand remained "robust" and that it had enough inventory to mitigate any potential supply chain disruptions.

The specialist generics manufacturer acknowledged that it had started to experience inflationary pressures on the back of the conflict, which has sent global energy prices soaring and effectively closed the vital Strait of Hormuz. Most of the higher costs were linked to shipping, energy and insurance, Hikma confirmed.

However, it added that while it would continue to monitor the situation, it was currently able to absorb higher input inflation through a combination of strong trading and a "disciplined" approach to costs.

As a result, the firm reaffirmed annual guidance for group revenue growth of between 2% and 4%, and operating profits ranging from $720m to $770m.

Said Darwazah, Hikma's recently-installed chief executive, said: "Our three businesses are performing well, supported by our differentiated portfolio, recent product launches and our strong and growing commercial capabilities."

Shares in Hikma jumped as trading got underway, putting on 3% at 1,365.5p by 0815 BST.

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