DGAP-News: STADA: Group sales increased in 1-9/2010 - adjusted EBITDA went up considerably - high burdening one-time special effects - confirmation of outlook for 2010
(firmenpresse) - STADA Arzneimittel AG / Key word(s): Interim Report
11.11.2010 07:25
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Important items at a glance
- Group sales EUR 1,177.8 million (+3%)
- Adjusted EBITDA EUR 224.2 million (+12%)
- Adjusted earnings per share EUR 1.55 (+8%)
- High burdening one-time special effects of EUR 63.1 million before
taxes
- Free cash flow EUR 56.2 million (+9%) - net debt further reduced (EUR
879.1 million)
- Consistent execution of 'STADA - build the future'
- Outlook for 2010 confirmed
Today, on November 11, 2010, STADA Arzneimittel AG published the financial
results for the first nine months of 2010. Accordingly, Group sales
increased by 3% in the first three quarters of the current financial year
compared to the corresponding period of the previous year. Key earnings
figures were at the same time influenced by high one-time special effects
in the amount of EUR 63.1 million before or EUR 53.6 million after taxes -
primarily due to write-downs on receivables as a result of liquidity
problems on the part of Serbian wholesalers and expenses in connection with
the 'STADA - build the future' project - and thus decreased. Operationally,
however, i.e. excluding one-time special effects, all key earnings
figures for the first nine months of 2010 exceeded the key earnings figures
of the comparable period in the previous year.
'In the first nine months of 2010, we further expanded our international
business activities in order to become more independent from the German
market, which continues to be difficult. Overall, the operating development
in the international markets that are important for us was thereby positive
as expected', said Hartmut Retzlaff, Chairman of the Executive Board. 'And
also in Serbia, we anticipate a recovery following the burdens there in the
third quarter as a result of the now changed local business policy in the
current fourth quarter', Retzlaff is confident.
Development of Sales
Group sales rose in the first nine months of 2010 - despite the continuing
difficult framework conditions particularly in the Serbian and German
markets - by 3% to EUR 1,177.8 million (1-9/2009: EUR 1,138.5 million). The
Group's international sales thus had a share of 67% in Group sales in the
reporting period (1-9/2009: 64%). In the third quarter of 2010 taken alone,
STADA recorded an increase in Group sales of 4% to EUR 399.7 million (third
quarter of 2009: EUR 383.3 million).
When effects on sales attributable to changes in the Group portfolio and
currency effects are taken into account, Group sales increased by 2% in the
first nine months of 2010 compared to the corresponding period in the
previous year.
Sales of Generics, which continues to be the significantly larger core
segment (share of Group sales 69.3%, 1-9/2009: 71.7%), was at about the
level of the previous year - despite the partly difficult framework
conditions in individual national markets - to EUR 815.7 million (1-9/2009:
EUR 816.6 million) in the first three quarters of 2010. Adjusted, generics
sales in the Group were also at about the level of the previous year.
Branded Products (share of Group sales 26.4%, 1-9/2009: 24.5%) rose in the
first nine months of the current financial year by 12% to EUR 311.4 million
(1-9/2009: EUR 278.7 million). The Group recorded an increase of 6% in
adjusted sales of branded products.
In Europe, the STADA Group achieved an increase in sales of 3% to EUR
1,122.1 million in the reporting period (1-9/2009: EUR 1,093.0 million).
STADA's sales in European markets thus amounted to a 95.3% (1-9/2009:
96.0%) share of Group sales. STADA's adjusted sales in European markets
increased by 1%.
In Western Europe, sales rose in the first three quarters of the current
financial year by 3% to EUR 852.1 million (1-9/2009: EUR 825.8 million).
The decreased sales in Germany had a particularly noticeable curbing effect
here. STADA's sales in Western European countries thus amounted to a 72.3%
share (1-9/2009: 72.5%) of Group sales. Adjusted, STADA's sales in Western
Europe increased by 2%.
In Eastern Europe the Group recorded a sales plus of 1% to EUR 270.0
million (1-9/2009: EUR 267.1 million) in the first nine months of 2010.
Sales generated by STADA in Eastern European markets thus had a share of
22.9% of Group sales (1-9/2009: 23.5%). STADA's adjusted sales in Eastern
Europe decreased by 1%. The curbed sales development in the Eastern
European market was predominantly characterized by the difficult situation
in Serbia, which affected all market participants there.
In Asia, STADA's sales rose in the first three quarters of the current
financial year by 23% to EUR 39.7 million (1-9/2009: EUR 32.2 million).
STADA's sales in the Asian countries thus contributed 3.4% (1-9/2009: 2.8%)
to Group sales. STADA's adjusted sales in Asia increased by 18%.
STADA recorded an increase in Group sales in the rest of the world in the
reporting period of 21% to EUR 16.0 million (1-9/2009: EUR 13.3 million).
Sales in the rest of the world thus had a share of 1.4% in Group sales
(1-9/2009: 1.2%). STADA's adjusted sales growth amounted here to 19%.
Earnings development
Due to the curbed sales development in Serbia and Germany, high one-time
special effects in the third quarter of 2010, primarily due to write-downs
on receivables as a result of liquidity problems on the part of Serbian
wholesalers, as well as expenses in connection with the 'STADA - build the
future' project, the Group's key earnings figures in the reporting period
decreased; operationally, however, i.e. excluding one-time special effects,
they all exceeded the key earnings figures from the corresponding period in
the previous year. In addition, all adjusted earnings margins, too, rose in
the first nine months of 2010 primarily as a result of continuous cost
optimization and an increased focus on profitability.
Operating profit decreased in the first three quarters of 2010 by 19% to
EUR 104.9 million (1-9/2009: EUR 129.1 million). In the third quarter of
2010 taken alone, operating profit decreased by 85% to EUR 6.3 million
(third quarter of 2009: EUR 43.7 million). Net income declined in the first
nine months of 2010 by 46% to EUR 38.8 million (1-9/2009: EUR 71.5
million). In this period, the tax rate rose to 41.1% (1-9/2009: 21.8%).
This effect is based in particular on the limited tax deductibility of
special effects as well as a structurally changed regional earnings
allocation. In the third quarter of 2010 taken alone, net income amounted
to EUR -11.2 million (third quarter of 2009: EUR 23.2 million). Earnings
before interest, taxes, depreciation and amortization (EBITDA) recorded a
decline in the first three quarters of 2010 of 4% to EUR 182.9 million
(1-9/2009: EUR 190.2 million). In the third quarter of 2010 taken alone,
EBITDA decreased by 40% to EUR 40.0 million (third quarter of 2009: EUR
66.2 million). Earnings before interest and taxes (EBIT) went down by 19%
to EUR 105.3 million (1-9/2009: EUR 129.9 million) in the reporting period.
In the third quarter of 2010 taken alone, EBIT declined by 85% to EUR 6.5
million (third quarter of 2009: EUR 43.4 million). Earnings before taxes
(EBT) recorded a decrease by 28% to EUR 66.1 million (1-9/2009: EUR 91.7
million). In the third quarter of 2010 taken alone, EBT decreased to EUR
-6.3 million (third quarter of 2009:EUR 30.8 million). Earnings per share
were at EUR 0.66 in the first nine months of 2010 (1-9/2009: EUR 1.22). In
the third quarter of 2010 taken alone, earnings per share amounted to EUR
-0.19 (third quarter of 2009: EUR 0.39). Diluted earnings per share were at
EUR 0.65 in the first three quarters of 2010 (1-9/2009: EUR 1.22). In the
third quarter of 2010 taken alone, diluted earnings per share amounted to
EUR -0.19 (third quarter of 2009: EUR 0.39).
The key earnings figures of the first nine months of 2010 included
burdening one-time special effects in the total amount of EUR 63.1 million
before taxes or EUR 53.6 million after taxes (1-9/2009: net burden due to
one-time special effects in the amount of EUR 12.1 million before taxes or
EUR 9.4 million after taxes). In the third quarter of 2010, one-time
special effects resulted in a burden on earnings in the total amount of EUR
49.7 million before or EUR 43.1 million after taxes (third quarter of 2009:
net burden on earnings due to one-time special effects in the amount of EUR
11.0 million before or EUR 8.0 million after taxes). As a result of
non-operational effects from currency influences and interest rate hedge
transactions the key earnings figures were relieved by a total amount of
EUR 1.8 million before or EUR 1.2 million after taxes in the reporting
period (1-9/2009: net burden on earnings due to non-operational effects
from currency influences and interest rate hedge transactions in the amount
of EUR 5.1 million before or EUR 3.4 million after taxes). In the third
quarter of 2010, non-operational effects from currency influences and
interest rate hedge transactions resulted in a relief of earnings in the
total amount of EUR 0.5 million before or EUR 0.3 million after taxes
(third quarter of 2009: net burden on earnings due to non-operational
effects from currency influences and interest rate hedge transactions in
the amount of EUR 1.6 million before or EUR 1.0 million after taxes).
After adjusting the key earnings figures for influences distorting the
period comparison resulting from one-time special effects and
non-operational effects from currency influences and interest rate hedge
transactions, adjusted operating profit increased in the first nine months
of 2010 by 15% to EUR 165.6 million (1-9/2009: EUR 143.5 million). In the
third quarter taken alone, adjusted operating profit recorded a slight
increase of 2% to EUR 56.0 million (third quarter of 2009: EUR 54.8
million). Adjusted net income increased by 8% to EUR 91.2 million in the
first nine months of the current financial year (1-9/2009: EUR 84.3
million). In the third quarter of 2010 taken alone, adjusted net income
showed a decrease of 2% to EUR 31.5 million (third quarter of 2009: EUR
32.1 million). STADA recorded an increase in adjusted earnings before
interest, taxes, depreciation and amortization (adjusted EBITDA) of 12% to
EUR 224.2 million in the first nine months of 2010 (1-9/2009: EUR 200.4
million). In the third quarter of 2010 taken alone, STADA recorded an
increase in adjusted EBITDA of 1% to EUR 75.6 million (third quarter of
2009: EUR 74.6 million). Adjusted earnings before interest and taxes
(adjusted EBIT) went up by 16% to EUR 166.0 million (1-9/2009: EUR 143.5
million) in the reporting period. In the third quarter taken alone,
adjusted EBIT showed an increase of 3% to EUR 56.2 million (third quarter
of 2009: EUR 54.4 million). Adjusted earnings before taxes (adjusted EBT)
increased by 17% to EUR 127.4 million (1-9/2009: EUR 108.8 million) in the
first three quarters of 2010. In the third quarter of 2010 taken alone,
adjusted EBT went down by 1% to EUR 42.9 million (third quarter of 2009:
EUR 43.4 million). Adjusted earnings per share were at EUR 1.55 in the
first nine months of 2010 (1-9/2009: EUR 1.44). In the third quarter of
2010 taken alone, adjusted earnings per share amounted to EUR 0.54 (third
quarter of 2009: EUR 0.55). Adjusted diluted earnings per share were at EUR
1.52 (1-9/2009: EUR 1.44) in the reporting period. In the third quarter of
2010 taken alone, adjusted dilutedearnings per share amounted to EUR 0.53
(third quarter of 2009: EUR 0.55).
'STADA - build the future'
In the course of the implementation of the 'STADA - build the future'
project, the Group, as is known, in the third quarter of the current
financial year, transferred the Dutch packaging unit in Etten-Leur as of
August 1, 2010. Within the scope of the transfer, the 113 employees and the
assets in the amount of EUR 0.7 million also passed to the acquiring
company. The book loss for STADA associated with the transfer of the
relevant property plant and equipment, which is within the scope of project
planning for 'STADA - build the future', amounted to EUR 6.2 million before
or EUR 5.8 million after taxes and was reported as a burdening one-time
special effect in the third quarter of 2010.
In the context of the 'STADA - build the future' project, the Group
moreover implemented a restructuring of the sales of branded products in
Italy in the third quarter of 2010, which should lead to a reduction of the
relevant sales force. Related discussions between Crinos and the Italian
trade unions are currently taking place. In view of this, expenses were
deferred already in the third quarter of the current financial year, which
were recorded as burdening one-time special effects. As a result of the
rapid proceedings in Italy, the special burden for 'STADA - build the
future' will exceed the amount of EUR 10 million originally expected in
2010.
Finally, as of October 1, 2010, the Group implemented the comprehensive
reform of internal reporting lines envisaged by 'STADA - build the future'.
The reporting structure, previously primarily locally aligned, was changed
to a predominantly functional organizational structure for the areas of
Finance as well as Production and Development (including Procurement); the
sales functions remain close to the market, i.e. primarily locally and
regionally organized.
Financial position and cash flow
As of the reporting date September 30, 2010, the equity-to-assets ratio, at
34.4% (December 31, 2009: 35.5%), continued to be clearly above the minimum
ratio targeted by the Executive Board. Net debt amounted to EUR 879.1
million as of September 30, 2010 (December 31, 2009: EUR 899.0 million). If
the net debt of the Group is placed in proportion to the adjusted EBITDA of
STADA, this value - on linear extrapolation of the adjusted EBITDA of the
first nine months on a full year basis - amounted to 2.9. The Executive
Board continues to target a maximum value of 3 for this ratio on a full
year basis.
Besides a corporate bond, promissory notes in the total amount of EUR 525.0
million as of September 30, 2010 continue to contribute to a significant
degree to the long-term refinancing of the Group. A large tranche of these
promissory notes in the amount of approx. EUR 195.5 million do not next
reach maturity until the fourth quarter of 2011.
In addition, STADA currently continues to have short-term firmly-pledged
open credit lines i.e. not utilized by the Group, in the amount of over EUR
500 million.
The Group's cash flow from operating activities in the first nine months of
the current financial year amounted to EUR 130.6 million (1-9/2009: EUR
124.7 million). Free cash flow was at EUR 56.2 million in the reporting
period (1-9/2009: EUR 51.8 million, adjusted for influences from other
accounting periods at that time, EUR 62.5 million). Free cash flow adjusted
for expenses from acquisitions and proceeds from disposals amounted to EUR
82.7 million in the reporting period, while free cash flow adjusted for
expenses from acquisitions and proceeds from disposals as well as
influences from other accounting periods had been at EUR 57.1 million in
the first nine months of 2009.
'We have achieved our goal to further improve both the operating cash flow
and the adjusted free cash flow in the first nine months of 2010. Resulting
from intensified working capital management and consequent implementation
of the 'STADA - build the future' project, we continue to expect positive
contributions here also in the future', commented Helmut Kraft, Chief
Financial Officer of STADA, on the improved cash flow.
Regional development in national markets important for STADA
In Germany, which continues to be the Group's largest national market,
sales in the first nine months of the current financial year decreased by
4% to EUR 392.7 million (1-9/2009: EUR 407.4 million) and were thus below
expectations from the beginning of the year. STADA's German business thus
contributed 33.3% to Group sales in the first three quarters of 2010
(1-9/2009: 35.8%). Sales achieved by STADA in the German market with
generics in the first nine months of 2010 thus had a share of 76%
(1-9/2009: 78%) of sales generated in the German market.
The decrease in sales in Germany continued to be attributable to the
ongoing difficult local framework conditions for generics. Sales in the
German Generics segment in the reporting period thus decreased by 6% to EUR
298.6 million (1-9/2009: EUR 318.4 million). The STADA Group's market share
of generics sold in German pharmacies declined by volume in the first nine
months of 2010 to approx. 12.6% (financial year 2009: approx. 13.4%). This
continues to be contrasted however with operating profitability in the
German Group business, as expected, only just under Group average in the
first three quarters of 2010.
This development in the German market is primarily attributable to the
results achieved by various STADA sales companies in the context of the
numerous tenders for discount agreements by statutory health insurance
organizations. STADA continues to participate on an ongoing basis in
tenders for such discount agreements using various bid strategies
characterized by margin and market share aspects and consequently also with
a large variation in terms of award results. The associated primary
objective that continues to be pursued by the Group of reaching an
appropriate operating profitability in the German market will, for the full
year 2010, result in a decrease in sales and market share for STADA in the
Generics segment in Germany, without negatively affecting the position of
the STADA Group as the clear number 3 in the German generics market.
This local market strategy currently being pursued by STADA is also
attributable to the fact that further laws aiming to make structural
changes in the German health care system are currently going through the
legislative process. In this context, different regulatory changes are also
being discussed for the structural element of discount agreements - with
the goal, among other things, of achieving a greater degree of acceptance
among patients as well as improved anti-trust protection - which, if
actually implemented, in the current assessment of the Executive Board,
could lead overall to moderately positive effects for generics suppliers
from their expected effective date as of January 1, 2011.
In Russia, which continues to be the Group's second most important national
market, STADA generated, applying the exchange rates of the previous year,
pleasing sales growth of 16% in the reporting period - in spite of a local
price regulation introduced on April 1, 2010, for so-called essential
pharmaceuticals, which affects approx. 40% of local Group sales. In euro,
sales went up by 22% to EUR 156.0 million (1-9/2009: EUR 127.4 million).
The two core segments in the Russian market had nearly the same share of
local Group sales in the first nine months of 2010. With generics, the
Group achieved sales growth of 15% to EUR 77.9 million (1-9/2009: EUR 67.6
million) or 50% of STADA's sales in Russia (1-9/2009: 53%).
In Italy, the Group recorded sales growth in the first three quarters of
2010 of 20% to EUR 99.9 million (1-9/2009: EUR 83.1 million). With a
considerable increase of 43% to EUR 68.0 million (1-9/2009: EUR 47.5
million), generics continued to have the largest share of local sales, thus
contributing 68% (1-9/2009: 57%) to Italian sales. The significant sales
growth in generics was based on the relatively low comparable basis of the
corresponding period in the previous year, a ban on discounts to the trade
channels as well as overall strong market growth.
In Belgium, STADA achieved sales growth in the first three quarters of the
current financial year in the amount of 10% to EUR 99.1 million (1-9/2009:
EUR 90.4 million). With an increase of 10% to EUR 94.0 million (1-9/2009:
EUR 85.8 million), generics thereby continued to have the largest share of
local sales in the reporting period. They thus had a 95% share of STADA's
Belgian sales (1-9/2009: 95%).
In Spain, STADA achieved considerable sales growth in the amount of 10% to
EUR 61.8 million in the reporting period (1-9/2009: EUR 56.2 million). This
was due primarily to the growth of the Spanish generics business. In this
market characterized by an increased growth dynamic, STADA was able to
increase generics sales in the first nine months of 2010 by 12% to EUR 56.9
million (1-9/2009: EUR 50.9 million). Generics thus contributed 92% in the
first three quarters of the current financial year (1-9/2009: 91%) to
STADA's sales in Spain.
In Serbia, sales declined in the first nine months of 2010 by 27% applying
the exchange rates of the previous year. In euro, the Group recorded a
decrease in sales of 33% to EUR 52.7 million (1-9/2009: EUR 78.7 million).
STADA generated sales of EUR 36.9 million with generics in the local market
in the reporting period (1-9/2009: EUR 61.4 million). Generics thus
contributed 70% (1-9/2009: 78%) to sales in Serbia. The primary reason for
this development remained the deliberate renouncement, continued also in
the third quarter of 2010, by the Serbian sales force of further sales
possible in the double-digit million euro area accumulated for the current
financial year, in order to reduce the default risk on receivables for the
Group in view of the ongoing liquidity problems on the part of Serbian
wholesalers (see the Company's ad hoc release of September 28, 2010).
Under new management, Hemofarm will modify the local distribution model
with the goal of improving the risk profile with respect to wholesalers and
customers. In addition, Hemofarm's cost structure, in the context of a
special project, is currently being rapidly adjusted to the changed
environmental conditions, in the context of which specific measures may
considerably exceed the optimizations already planned in the context of the
Group-wide 'STADA - build the future' project.
Research and development
Research and development costs amounted to EUR 39.1 million in the first
three quarters of the current financial year (1-9/2009: EUR 33.8 million).
In the first nine months of 2010, the Group launched 442 individual
products worldwide (1-9/2009: 335 product launches) in individual national
markets.
Outlook
As expected, the sales and earnings development of the STADA Group will
also be characterized in financial year 2010 by differing and partially
contradictory factors in the various national markets.
Against the backdrop of all the factors influencing the Group's earnings
development mentioned in this outlook, the Executive Board, in its overall
assessment for the prognosis for financial year 2010 believes from today's
perspective - provided the recovery now strived for in the Serbian business
in the current fourth quarter in the course of the changed business policy
- can be just achieved. According to this, the opportunity continues to
exist for growth in Group sales and operating profit i.e. adjusted for
one-time special effects, with at least stable operating margins.
In addition, the Executive Board continues to hold to the long-term targets
envisaged for financial year 2014, according to which Group sales of
approx. EUR 2.15 billion, an adjusted EBITDA of approx. EUR 430 million and
net income of approx. EUR 215 million should be reached.
Additional information:
STADA Arzneimittel AG / Corporate Communications / Stadastraße 2-18 / D -
61118 Bad Vilbel / Phone: +49 (0) 6101 603-113 / Fax: +49 (0) 6101 603-506
/ E-mail: communications(at)stada.de
Or visit us in the Internet at www.stada.com.
11.11.2010 Dissemination of a Corporate News, transmitted by DGAP -
a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
DGAP's Distribution Services include Regulatory Announcements,
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Language: English
Company: STADA Arzneimittel AG
Stadastraße 2-18
61118 Bad Vilbel
Deutschland
Phone: +49 (0)6101 603- 113
Fax: +49 (0)6101 603- 506
E-mail: communications(at)stada.de
Internet: www.stada.de
ISIN: DE0007251803, DE0007251845,
WKN: 725180, 725184,
Indices: MDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard), Düsseldorf;
Freiverkehr in Hamburg, München, Berlin, Hannover, Stuttgart
End of Announcement DGAP News-Service
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Datum: 11.11.2010 - 07:25 Uhr
Sprache: Deutsch
News-ID 32562
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