Health care services group United Drug posted a strong increase in profits yesterday sending its shares up by nearly 6 per cent.

The company reported good progress across all four of its divisions in the year ending September 30th, delivering its twentieth year of double-digit compound profit growth. Trading profits before exceptionals rose by 13 per cent to €51.8 million, while turnover was up by 6 per cent at €1.3 billion. Pretax profits before exceptionals rose by 16 per cent to €49.2 million.

Liam FitzGerald, United Drug's chief executive, said the company would continue to focus on investment across all operations so that "all boats continue to rise".

"We're focused on continuing to deliver double-digit earnings growth," he said.

Mr FitzGerald pointed to particularly solid growth in the company's contract sales division, which represents about 15 per cent of turnover. A key driver here was the acquisition of the third-largest UK contract sales outsourcing firm, In2Focus, at the start of June.

Mr FitzGerald described business in wholesaling as "very satisfactory" for the year, adding that the firm had "gained market share" from its competitors, Uniphar and Celesio. He said United Drug now had about 44 per cent of the pharmaceutical wholesaling business in the Republic and about 50 per cent in the North. The division posted 13 per cent profit growth, despite absorbing government-imposed price reductions in the North.

Mr FitzGerald acknowledged that similar cuts could be on the way in the Republic, but noted that they would only affect 30 per cent of the overall group.

He said the firm had made "great sales progress" in its medical and scientific division, pointing to a number of acquisitions which would allow for business development abroad. Medical and scientific represents 20-25 per cent of the group and will continue to be a focus for acquisitions in the future, Mr Fitz-Gerald said.

He also pointed to possible deals in speciality distribution, both in the UK and in northern Europe. The group's existing contract distribution outsourcing business was transferred into United Drug's new facility at Magna Park on Dublin's Belgard Road over the year and enjoyed "a very strong performance", according to Mr FitzGerald.

United Drug has declared a final dividend of 4 cent per share, lifting the total dividend for the year to 5.5 cent, up 15 per cent on 2004. Shares in the company closed 13 cent higher at €3.30.