DGAP-News: STADA: Good Group development as expected in H1/2010 - Group sales +3% - Net income +4% - EBITDA +15% - Initial successes with implementation of 'STADA - build the future' - Outlook remains positive for 2010
(firmenpresse) - STADA Arzneimittel AG / Half Year Results
12.08.2010 07:25
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Important items at a glance
* Group sales EUR 778.1 million (+3%)
* Net income EUR 50.0 million (+4%), adjusted EUR 59.7 million (+14%)
* EBITDA EUR 142.9 million (+15%), adjusted EUR 148.6 million (+18%)
* Transfer of the Dutch packaging unit in Q3 in the context of 'STADA -
build the future' project - reduction in the number of employees by 113
* Outlook remains positive for 2010: growth of sales and operating (i.e.
adjusted for one-time special effects) earnings with at least stable
operating margins in an environment that continues to be difficult in
various national markets
Today, on August 12, 2010, STADA Arzneimittel AG published the financial
results for the first half year of 2010. Accordingly, the Group recorded an
increase in sales and earnings as well as in almost all sales-related
profit margins. Overall, the development of the Group in the reporting
period was within the expectations published at the beginning of the year
and, in the view of the Executive Board, may be described as good,
particularly against the backdrop of a continuing difficult environment in
individual national markets such as in Serbia and Germany.
'It is pleasing that we already recorded initial successes with the
implementation of the Group-wide project 'STADA - build the future' in the
current third quarter', said Hartmut Retzlaff, Chairman of the Executive
Board of STADA Arzneimittel AG. Thus, a reduction in the number of
employees by 113 was already achieved through the transfer of the Dutch
packaging unit. In view of this, the Executive Board assumes that STADA
will be able to achieve the announced savings in the expected range in the
mid-term.
Development of sales
In the first half year of 2010, Group sales rose by 3% to EUR 778.1 million
(1-6/2009: EUR 755.2 million). This was primarily due to the Group's
international sales, which had a total share of 67% (1-6/2009: 63%) in
Group sales in the first six months of the current financial year and thus
recorded an increase of 9% to EUR 518.2 million (1-6/2009: EUR 473.6
million).
When effects on sales from changes in the Group portfolio and currency
effects are taken into account, Group sales increased by 2% in the first
half year 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 70.0%, 1-6/2009: 71.2%), grew in the first
six months of 2010 - despite the partly difficult framework conditions in
individual national markets - by 1% to EUR 544.6 million (1-6/2009: EUR
537.8 million). Adjusted generics sales in the Group recorded an increase
of 1%.
Branded Products (share of Group sales 26.0%, 1-6/2009: 24.8%) increased in
the first half of the current financial year by 8% to EUR 202.5 million
(1-6/2009: EUR 187.6 million). Adjusted sales of branded products in the
Group recorded growth of 3%.
In Europe, the STADA Group recorded an increase in sales of 2% toEUR 742.3
million in the first six months of 2010 (1-6/2009: EUR 724.6 million).
STADA's sales in European markets thus amounted to a 95.4% (1-6/2009:
95.9%) share of Group sales. Adjusted, STADA's Group sales in Europe grew
by 1%.
In Western Europe, sales rose by 2% to EUR 569.0 million in the reporting
period (1-6/2009: EUR 558.9 million). Sales generated by STADA in Western
European markets thus contributed 73.1% (1-6/2009: 74.0%) to Group sales.
STADA's adjusted sales in Western Europe increased by 1%.
In Eastern Europe, sales increased by 5% to EUR 173.3 million in the half
year under review (1-6/2009: EUR 165.7 million). STADA's sales in Eastern
European markets thus amounted to a 22.3% (1-6/2009: 21.9%) share of Group
sales. STADA's adjusted sales in Eastern Europe recorded a sales increase
of 2%. The year-on-year comparison here must particularly take into account
the difficult market situation in Serbia.
In Asia, STADA's sales rose by 16% to EUR 25.4 million in the first half
year of 2010 (1-6/2009: EUR 22.0 million). Sales in Asia thus had a share
of 3.3% in Group sales (1-6/2009: 2.9%). STADA's adjusted sales in Asian
markets increased by 13%.
Group sales in the rest of the world rose in the reporting period by 21% to
EUR 10.4 million (1-6/2009: EUR 8.6 million). Sales from the rest of the
world thus contributed 1.3% (1-6/2009: 1.1%) to Group sales. STADA's
adjusted sales growth amounted here to 19%.
Earnings development
All reported key earnings figures increased in the first six months of the
current financial year.
In the first half year of 2010, net income rose by 4% to EUR 50.0 million
(1-6/2009: EUR 48.3 million). Operating profit grew by 15% to EUR 98.6
million (1-6/2009: EUR 85.4 million). Earnings before interest, taxes,
depreciation and amortization (EBITDA) increased by 15% in the half year
under review to EUR 142.9 million (1-6/2009: EUR 124.0 million). Earnings
before interest and taxes (EBIT) recorded growth by 14% to EUR 98.8 million
(1-6/2009: EUR 86.6 million). Earnings before taxes (EBT) increased by 19%
to EUR 72.4 million (1-6/2009: EUR 60.9 million). Earnings per share grew
by 4% to EUR 0.85 (1-6/2009: EUR 0.82). Diluted earnings per share amounted
to EUR 0.83 (1-6/2009: EUR 0.82).
In the first half year of 2010, the key earnings figures included burdening
one-time special effects in the total amount of EUR 13.4 million before or
EUR 10.5 million after taxes (1-6/2009: net burden on earnings from
one-time special effects in the amount of EUR 1.1 million before or EUR 1.3
million after taxes) as well as relieving non-operational effects from
currency influences and interest rate hedge transactions in the total
amount of EUR 1.3 million before or EUR 0.9 million after taxes (1-6/2009:
net burden on earnings from non-operational effects from currency
influences and interest hedge transactions in the amount of EUR 3.4 million
before or EUR 2.5 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 net income increased by 14% to EUR 59.7 million in
the first six months of the current financial year (1-6/2009: EUR 52.1
million). Adjusted operating profit rose by 24% to EUR 109.6 million
(1-6/2009: EUR 88.7 million). Adjusted earnings before interest, taxes,
depreciation and amortization (adjusted EBITDA) recorded an increase of 18%
to EUR 148.6 million in the first half year of 2010 (1-6/2009: EUR 125.8
million). Adjusted earnings before interest and taxes (adjusted EBIT) grew
by 23% to EUR 109.9 million (1-6/2009: EUR 89.0 million). Adjusted earnings
before taxes (adjusted EBT) increased by 29% to EUR 84.5 million (1-6/2009:
EUR 65.5 million). Adjusted earnings per share rose by 15% to EUR 1.02
(1-6/2009: EUR 0.89). Adjusted diluted earnings per share were at EUR 0.99
(1-6/2009: EUR 0.89).
Initial successes with implementation of 'STADA - build the future'
In the second quarter of 2010, STADAhad, as is known, initiated the
implementation of the Group-wide project 'STADA - build the future' to
sustainably increase earnings. In the course of this, initial successes
with the implementation were already recorded in the current third quarter.
So the Group transferred the Dutch packaging unit in Etten-Leur to Hansfree
B.V. as of August 1, 2010. According to the contracts agreed with the
acquirer, the Group can draw on the capacities of the unit sold for a
transitional period at fixed costs and to a variable extent determined by
STADA. 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.
Thus, a reduction in the number of employees by 113 was already achieved in
the current third quarter. The book loss for STADA associated with the
transfer, which is within the scope of project planning for 'STADA - build
the future', amounted to EUR 5.9 million before or EUR 5.6 million after
taxes and will be reported as a burdening one-time special effect in the
current third quarter.
Financial position and cash flow
As of the reporting date June 30, 2010, the equity-to-assets ratio, at
34.6% (December 31, 2009: 35.5%), continued to be clearly above the minimum
ratio strived for by the Executive Board. Net debt amounted to EUR 902.6
million as of June 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 half year on a full year basis - was at 3.0. The Executive Board
continues to strive for a maximum value of 3 for this ratio on a full year
basis.
The Executive Board currently remains hesitant to again increase the
Group's net debt in order to finance external growth, without, however,
ruling out taking advantage of special opportunities.
In view of the targeted optimization of the long-term refinancing structure
to increase liquidity security, in the second quarter of 2010, as is known,
STADA placed a corporate bond with a volume of EUR 350 million. In
addition, promissory notes in the total amount of EUR 565.0 million as of
June 30, 2010 continue to contribute to a significant degree to the
longterm 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.
Furthermore, STADA continues to have short-term firmly-pledged bilateral
credit lines. Currently the Group has access to over EUR 500 million in
such open, i.e. not currently utilized by the Group, credit lines.
The Group's cash flow from operating activities in the first six months of
the current financial year was at EUR 104.0 million (1-6/2009: EUR 55.9
million). Free cash flow amounted to EUR 40.6 million in the half year
under review (1-6/2009: EUR -4.9 million, adjusted for influences from
other accounting periods at that time EUR 5.8 million). Free cash flow
adjusted for expenses from acquisitions and proceeds from disposals
amounted to EUR 64.0 million in the first half year of 2010, while free
cash flow adjusted for expenses from acquisitions and proceeds from
disposals as well as for influences from other accounting periods had
amounted to EUR 14.2 million in the first half year of 2009.
'As planned, we further improved both cash flow from operating activities
and free cash flow in the first half year of 2010. This development shows
the continued success of the measures which we intensified for optimizing
the working capital management', said Helmut Kraft, STADA's Chief Financial
Officer, about the continued positive cash flow of the Group.
Regional development in national markets important for STADA
In Germany, which continues to be the largest national market for STADA,
sales decreased in the first half year of 2010 by 8% to EUR 259.9 million
(1-6/2009: EUR 281.6 million). German business activities thus had a share
of 33.4% in Group sales in the first six months of the current financial
year (1-6/2009: 37.3%). Sales generated by STADA with generics in Germany
in the first six months thus amounted to a share of 76% of Group sales
achieved in Germany (1-6/2009: 77%).
This decrease in sales in the German market continues to be based on the
ongoing difficult local framework conditions for generics. Sales in the
German Generics segment in the half year under review, having declined by
9% to EUR 196.7 million (1-6/2009: EUR 217.1 million), were thus below the
Group's original expectations; the STADA Group's market share of generics
sold in German pharmacies decreased by volume in the first half year of
2010 to approx. 12.8% (financial year 2009: approx. 13.5%). This is
contrasted however with operating profitability in the German Group
business as expected only just under Group average in the first half year
of 2010.
This development in the German market is primarily characterized by the
results achieved by various STADA sales companies in the numerous tenders
for discount agreements by statutory health insurance organizations. STADA
continues to regularly participate 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 current primary objective pursued by the Group of reaching an
appropriate operating profitability in the German market may result in a
moderate decrease in sales and market share for STADA in the Generics
segment in Germany, without negatively affecting the position of the STADA
Group as clear number 3 in the German generics market.
This local market strategy currently being pursued is also due to the fact
that further laws aiming to make structural changes in the German health
care system are currently going through legislative procedures. 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 and
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 their outlook for the current financial year for overall business in
Germany, the Executive Board, in view of the difficult market environment
described and the strategies currently being pursued there, now expects,
from today's perspective, a moderate decline in sales, with operating
profitability however just under Group average.
In Russia, which continues to be the Group's second most important national
market, STADA achieved pleasing sales growth in the first half year of 2010
in the amount of 17%, applying the exchange rates of the previous year, 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, the Group increased sales by 24% to EUR 96.8 million
(1-6/2009: EUR 77.8 million). In the reporting period, the two core
segments in the Russian market continued to have nearly the same share of
local Group sales. The share of generics thus amounted to 51% of STADA's
sales in Russia (1-6/2009: 54%).
For financial year 2010, STADA continues to expect strong sales growth in
local currency in Russia with operating profitability above Group average.
The sales and earnings contributions of the Russian business activities at
Group level will remain largely dependent on the development of the
currency relation of the local currency, the Russian ruble, to the euro.
Sales generated by STADA in Belgium in the first half year of the current
financial year increased by 11% to EUR 68.2 million (1-6/2009: EUR 61.5
million). Generics thus continued to have the largest share of local sales
in the Belgian market in the reporting period and contributed 95%
(1-6/2009: 95%) to local sales.
For financial year 2010, STADA continues to expect another considerable
sales increasein Belgium with operating profitability at about Group
average.
In Serbia, STADA's seventh largest national market, sales decreased in the
first half year of 2010 by 15% applying the exchange rates of the previous
year. In euro, STADA recorded a decrease in sales of 21% to EUR 35.8
million (1-6/2009: EUR 45.2 million). The share of generics thus amounted
to 75% (1-6/2009: 75%) of local sales. The primary reason for the decrease
in sales was the deliberate avoidance by the Serbian sales force of further
sales possible in the second quarter of 2010, almost in the double-digit
million euro area, in order to reduce the default risk on receivables for
the Group in view of the liquidity problems on the part of local
wholesalers. In spite of this, further value adjustments in the amount of
EUR 3.5 million before or EUR 3.1 million after taxes had to be carried out
on receivables from local wholesalers in Serbia in the second quarter of
2010.
For the Serbian market in the current second half year, STADA expects sales
development that continues to be difficult. The operating profitability of
the subgroup managed from Serbia - i.e. not including the burdening effects
of value adjustments on receivables from local wholesalers - is expected to
be about or slightly above Group average in financial year 2010. Further
cost reductions in the operating business activity, among other things, are
expected to contribute to this. In view of this, this subgroup continues to
be expected to be a focus for measures to improve earnings in the context
of the Group-wide 'STADA - build the future' project for the optimization
of Group structures, whose implementation was begun in the second quarter
of 2010.
Research and development
Research and development costs amounted to EUR 26.0 million in the first
half year of 2010 (1-6/2009: EUR 22.2 million). Overall, STADA launched 308
individual products worldwide in the first half year of 2010 (1-6/2009: 236
product launches) in individual national markets.
Outlook
The Executive Board fundamentally confirms the outlook and risk report
published for the Group in STADA's Annual Report 2009. Together with the
supplementary statements and updates made in this interim report, it gives,
in the view of the Executive Board, an accurate and up-to-date overall
picture of the STADA Group's opportunities and risks.
STADA's business model is accordingly geared towards markets with long-term
growth potential in the health care and pharmaceutical markets; inevitably
linked to this, however, are risks and challenges that arise from
repeatedly intensive competition and changed or additional state
regulation. Therefore, in the Executive Board's assessment, far-reaching
regulatory interventions, intensive competition and significant margin
pressure will always occur in individual national markets. The latter
applies in particular to the increasing number of business in the generics
segment characterized by tenders.
Furthermore, the Group will, also in the future, have to deal with
non-operational influence factors, particularly specific effects from the
global financial and economic crisis. The development of the STADA Group in
financial year 2010 will thus continue to depend to a large extent on
currency relations, particularly those of the Russian ruble and Serbian
dinar to the euro.
Thus, the sales and earnings development of the STADA Group will, also in
the current financial year 2010, be characterized by differing and
partially contradictory factors in the various national markets. From the
overall sales increase for the Group expected by the Executive Board in
2010, however, positive influences on earnings development can also be
anticipated. Positive effects on earnings as a result of the 'STADA - build
the future' project, whose implementation was begun in the second quarter
of 2010, are to be expected for EBITDA adjusted for one-time special
effects and the correspondingly adjusted net income to a significant extent
from 2011. In the period until 2013, from today's perspective,
project-related investmentsof a total of approx. EUR 20 million as well as
project-related expenditure for special write-offs, personnel expenses and
consultancy services of a total of approx. EUR 50 million are to be
expected. The Group will recognize each of these project-related costs as a
one-time special effect according to progression of the project. As a
result for 2010, a net burden of approx. EUR 10 million is expected.
Against the backdrop of all the factors influencing the Group's earnings
development mentioned in this outlook, the Executive Board, from today's
perspective, in its overall assessment, continues to see the clear
opportunity to achieve both the short-term targets for financial year 2010
- sales and operating earnings growth and at least a stabilization of
operating margins - as well as the long-term targets set for financial year
2014 - Group sales of approx. EUR 2.15 billion and an adjusted EBITDA of
approx. EUR 430 million.
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.
12.08.2010 07:25 Ad hoc announcement, Financial News and Press Release distributed by DGAP. Medienarchiv atwww.dgap-medientreff.deandwww.dgap.de---------------------------------------------------------------------------
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 News DGAP News-Service
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Datum: 12.08.2010 - 07:25 Uhr
Sprache: Deutsch
News-ID 31968
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