STADA Arzneimittel AG / Interim Report/Quarter Results 13.11.2008 Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Important items at a glance Significant growth in the first nine months of 2008: o Group sales EUR 1,231.8 million (+13%) o Earnings before interest and taxes (EBIT) EUR 151.0 million (+14%) o Net income EUR 82.0 million (+18%) Significant details: o Net income adjusted for one-time special effects 1-9/2008: EUR 91.7 million (-2%) o International sales 1-9/2008: +18% growth, 65% share in Group sales o Revival of business trends in German generics business: +11% sales growth in Q3/2008 o Adjusted operating segment margin Q3/2008: Generics 15.4% Outlook from H1/2008 confirmed by Executive Board: o Subdued growth dynamic in H2/2008 o Good chances for significant growth once again in sales and earnings in the years to come The financial figures for the first nine months of 2008 published today, November 13, 2008, by STADA Arzneimittel AG were within the scope of the expectations of the Executive Board expressed in the Report on the First Six Months. 'Against the backdrop of a continuing difficult environment in several national markets, we are satisfied with STADAs current business development. Both in sales and net income we were able to achieve double-digit growth rates in the first nine months of the current fiscal year, and also to attain a net income adjusted for special effects at about the same high level as in the previous year', said STADA Arzneimittel AGs Chief Executive Officer Hartmut Retzlaff. Sales and earnings development of the STADA Group Group sales increased by 13% to EUR 1,231.8 million in the first nine months of the current fiscal year (1-9/2007: EUR 1,089.3 million). By comparing sales in the third quarter of 2008 with those in the third quarter of 2007, this results in a higher growth rate of 16%; thus, for the third quarter of 2008, the sales revival on a Group level as announced in the Report on the First Six Months can be noticed. STADAs international sales recorded an increase of 18% to EUR 796.3 million (1-9/2007: EUR 672.9 million) and reach with this disproportionate increase now a share of 64.6% (1-9/2007: 61.8%) in Group sales. Generics, which continues to be the clearly larger core segment (share in Group sales in 1-9/2008: 69.3%), sales increased by 4% to EUR 854.2 million in the first nine months of the current fiscal year (1-9/2007: EUR 821.5 million). Sales of the core segment Branded Products (share in Group sales in 1-9/2008: 22.2%) showed an also acquisition-related increase of 31% to EUR 273.0 million in the first nine months of 2008 (1-9/2007: EUR 208.2 million). In total, the earnings figures of the first nine months of 2008 were burdened by balanced one-time special effects of EUR 13.9 million before taxes or EUR 9.7 million after taxes (1-9/2007: burden due to one-time special effects of EUR 39.2 million before taxes or EUR 23.9 million after taxes). Net income increased by 18% to EUR 82.0 million in the reporting period (1-9/2007: EUR 69.8 million), net income adjusted for one-time special effects decreased moderately by 2% to EUR 91.7 million (1-9/2007: EUR 93.7 million) and thereby reached a level that was about the same as the previous year. Earnings per share in the first nine months of 2008 amounted to EUR 1.40 (1-9/2007: EUR 1.20), adjusted earnings per share were EUR 1.56 (1-9/2007: EUR 1.61). Diluted earnings per share in the first nine months of the current fiscal year amounted to EUR 1.36 (1-9/2007: EUR 1.15), adjusted diluted earnings per share were EUR 1.52 (1-9/2007: EUR 1.54). The other earnings figures recorded the following changes in the reporting period as compared to the first nine months of 2007: earnings before taxes (EBT) increased by 6% to EUR 110.3 million (1-9/2007: EUR 104.4 million), earnings before interest and taxes (EBIT) grew by 14% to EUR 151.0 million (1-9/2007: EUR 132.0 million), the operating profit decreased by 7% to EUR 149.8 million (1-9/2007: EUR 160.9 million) and earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 9% to EUR 210.9 million (1-9/2007: EUR 193.7 million). Operating profit in the Generics segment amounted to EUR 118.3 million in the reporting period (1-9/2007: EUR 152.8 million). This resulted in a sales-related operating segment margin for Generics in the amount of 13.9% (1-9/2007: 18.6%). By deducting the special effects of the respective period the adjusted operating segment margin of Generics for the first nine months of 2008 amounted to 14.6%. Additionally, STADAs Chief Financial Officer Wolfgang Jeblonski refers to the current development of this important margin for the Group: 'In the third quarter of 2008 taken alone we have reached an adjusted operating segment margin of 15.4% in Group Generics, and are therefore fully within the scope of our expectations as at the end of the first half of the year.' The Branded Products segment recorded an operating segment profit of EUR 47.5 million in the first nine months of the current fiscal year (1-9/2007: EUR 31.4 million). This corresponds to an operating segment margin for Branded Products in the amount of 17.4% (1-9/2007: 15.1%). By deducting this segments special effects of the respective period the adjusted operating segment margin of Branded Products for the first nine months of 2008 amounted to 17.6% and to 13.1% for the third quarter of 2008 taken alone. Regional Development in the STADA Group In STADAs ten largest national markets, sales were increased by a total of 15% in the reporting period in spite of mixed local business development. In Germany, which continues to be STADA's biggest national market with a share of 35.4% in Group sales (1-9/2007: 38.2%), the Group recorded sales growth of 5% to EUR 435.5 million (1-9/2007: EUR 416.4 million). The stronger segment of the Group in terms of growth in the German market in the first nine months of 2008 was the Branded Products segment. Its sales went up during that period by 20% to EUR 85.1 million (1-9/2007: EUR 70.7 million). In a difficult environment characterized by the health-care reform of 2007, sales in the Generics segment in Germany rose by 1% to EUR 345.6 million in the first nine months of 2008 as compared to the same period of the previous year (1-9/2007: EUR 343.4 million). The clearly stronger sales growth of 11%, when considering the third quarter of 2008 alone as compared to the same quarter of the previous year, is an indicator of a positive change of trend. The ALIUD PHARMA label in particular contributed to this growth with a sales increase of 30% to EUR 182.7 million (1-9/2007: EUR 140.4 million) in the first nine months of 2008; ALUID PHARMAs growth rate in the third quarter taken alone was at a strong 38%. Although for the Groups second German generics label, STADApharm, the sales achieved under this label accumulated over the first nine months of 2008 decreased by 20% to EUR 146.4 million (1-9/2007: EUR 183.9 million), this decrease was clearly slowed down to only 7% in the third quarter of 2008. An improved business development in the third quarter of 2008 can also be noticed for another generics sales label of the STADA Group in Germany, cell pharm. After a sales realignment carried out in the course of the year, cell pharm, which is active in the areas oncology and nephrology, was able to revive sales in the third quarter of 2008 strongly with a plus of 30% as compared to the third quarter of 2007, thus recording a total sales increase of 1% to EUR 14.8 million in the first nine months of 2008 (1-9/2007: EUR 14.7 million). In general, STADA Groups market share of the German pharmaceutical market continued to rise. According to IMS Health data, the market share in sales accumulated in the first nine months of 2008 was at 11.2% in terms of sales (1-9/2007: 10.8%) or 12.7% in terms of units sold (1-9/2007: 11.0%). In terms of earnings the German generics business will for the first time be below Group average in the current fiscal year due to the known high margin pressure. Here, STADA continues to be able and also strategically prepared to target further progress in terms of market position and market share by means of aggressive price and discount policy and even to accept margin reductions to achieve significant growth in volume for essential parts of the portfolio, as long as overall a profitable business situation is maintained. This also applies in particular to current tenders for new discount agreements from the Allgemeinen Ortskrankenkassen (AOK) which currently relate to an annual sales volume of the Group of less than EUR 100 million (STADA estimate based on market figures) and for which STADA sales companies have submitted comprehensive bids in due time in the current fourth quarter. The result of these tenders is not yet known. However, numerous objections regarding the tender method have been made to the AOK in the bidding process so far which, from STADAs perspective, have only partly been removed. Against this backdrop STADA reserves the right to take legal steps against any contracts being awarded; STADA also expects that competitors will take such legal steps. If, when and with what result these new discount agreements intended by the AOK will take effect is therefore, from the Executive Boards current perspective, not with certainty foreseeable; STADA is preparing for various possible result scenarios in an operatively adequate way. In Russia, STADAs second largest national market, the STADA Groups sales rose by 66% in local currency or by 56% in Euro to a total of EUR 132,0 million in the first nine months of 2008 (1-9/2007: EUR 84.5 million). Organic growth in Russia for the first nine months of 2008 amounted to 14% in local currency or 7% in Euro. The operating margin achieved in the Russian business thereby continued to be above Group average. In Serbia, the Group recorded sales growth of 4% in local currency and also of 4% in Euro to EUR 101.9 million in the reporting period (1-9/2007: EUR 98.3 million). By considering disposals made there since then sales growth was 9% in local currency or 8% in Euro. In the United Kingdom sales rose by 179% in local currency or 141% in Euro to EUR 87.8 million in the first nine months of 2008 (1-9/2007: EUR 36.5 million) due to the inclusion of the Forum Bioscience Group, which has been consolidated in the STADA Group since October 2007. The Forum Products division, which was also purchased as part of the acquisition of Forum Bioscience, was sold on September 23, 2008 at a price of approx. EUR 2.8 million with no effect on income. In the current fiscal year, with a low-margin sales contribution of EUR 49.8 million, Forum Products, which does not belong to the Groups core business, contributed 4.0% to STADA Group sales up to its deconsolidation as of August 30, 2008. In Belgium, a revival in demand has become apparent in the local generics business after the difficult first half of 2008. Thanks to strong growth of 31% in the third quarter of 2008 sales in Belgium increased by 7% to EUR 82.5 million for the first nine months of 2008 (1-9/2007: EUR 77.1 million). In Italy, sales went up slightly by 0.3% to EUR 80.6 million (1-9/2007: EUR 80.4 million) in the first nine months of 2008. By taking into account disposals as well as discontinued commercial activities the adjusted sales increase in Italy in the first nine months of 2008 was 5%. In France, STADA achieved sales growth of 9% to EUR 64.6 million in the reporting period (1-9/2007: EUR 59.3 million). Thanks to numerous product launches this increase was achieved despite the very intense discount competition in the pharmacy distribution channel. In Spain, sales increased by 5% to EUR 50.4 million in the first nine months of the current fiscal year (1-9/2007: EUR 48.1 million) despite a continuing intense discount competition as well as regulatory-related price reductions. In the Netherlands, STADA recorded a slight sales plus of 0.1% to EUR 30.1 million in the first nine months of 2008 (1-9/2007: EUR 30.0 million). The sales decrease as compared to the previous year after six months significantly related to local price reductions was offset by tenders from local health insurance organizations which were won in the third quarter of 2008. In Ireland sales increased also acquisition-related by 49% to EUR 20.3 million in the first nine months of 2008 (1-9/2007: EUR 13.6 million). In the Asian countries, the Group recorded a sales growth of 14% to EUR 36.3 million (1-9/2007: EUR 31.9 million) in the first nine months of 2008 in spite of a mixed local development. High number of new products Overall, STADA launched 322 individual products worldwide in the first nine months of 2008 (1-9/2007: 270 product launches) in individual national markets. STADAs product pipeline remains well-filled for a continuous flow of new products, particularly with the development focus Generics and thus guarantees future significant sales potentials. Financial position and cash flow In the Executive Boards view, the STADA Groups financial position continues to be stable. Thus, the equity-to-assets ratio was 36.8% as of September 30, 2008 (December 31, 2007: 36.6%) and thereby remains clearly, from the Executive Boards perspective, in a satisfying area of above approx. 30%. Net debt amounted to EUR 1,059.1 million on the reporting date September 30, 2008 (December 31, 2007: EUR 958.5 million) and is mainly financed via long-term promissory notes from various international and national banks with maturities in the area of 2010-2015.The Groups gross cash flow was EUR 142.7 million in the first nine months of the current fiscal year (1-9/2007: EUR 135.7 million). Cash flow from operating activities amounted to EUR 37.0 million in the reporting period (1-9/2007: EUR 111.1 million). By deducting one-time effects, the result is a comprehensively adjusted cash flow from operating activities of EUR 75.2 million approximately at the level of the previous year (1-9/2007: EUR 78.0 million). Outlook The outlook remains unchanged in principle regarding the statements made in the Report on the First Six Months. Even if various Group companies must continue to operate in a challenging environment, the Executive Board deems chances as good for a positive business development of the Company in the years to come. The basis for these chances continues to be the strategic focusing on growth markets as well as the Groups proven operative strengths. Beyond that, suitable acquisition objects will continue to be sought. In the outlook for the results of fiscal year 2008 overall, from todays perspective, once again clear sales growth within the Group is to be expected. It is still unclear, however, whether the growth rate will be in the double-digit percentage range. In terms of earnings, the Executive Board continues to assume, from todays perspective, that net income in 2008 will again show double-digit percentage growth as compared to net income 2007 (EUR 105.1 million) which was burdened by high one-time special effects. The earnings level adjusted for special effects of the previous year (adjusted net income 2007: EUR 146.8 million) will, however, not be achieved in fiscal year 2008. 'In view of our strategic and operating strength, we continue to deem chances as good for the years to come that despite conditions that remain challenging to once again be in a position to achieve significant growth in sales and earnings', commented STADA CEO Retzlaff. Further information: STADA Arzneimittel AG / Corporate Communications / Stadastraße 218 / 61118 Bad Vilbel / Germany Phone: +49(0) 6101 603-113 / Fax: +49(0) 6101 603-506 / E-Mail: communications@stada.de Or visit our website at www.stada.com DGAP 13.11.2008 --------------------------------------------------------------------------- Language: English Issuer: 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@stada.de Internet: www.stada.de ISIN: DE0007251803, DE0007251845, WKN: 725180, 725184, Indices: MDAX Listed: Regulierter Markt in Frankfurt (Prime Standard), Düsseldorf; Freiverkehr in Berlin, Hannover, Hamburg, München, Stuttgart End of News DGAP News-Service ---------------------------------------------------------------------------
DGAP-News: STADA results 1-9/2008: Sales +13%, net income +18% outlook confirmed
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