DGAP-News: Celesio AG / Key word(s): Quarter Results
Celesio AG: Massive government economy measures depress quarterly
earnings
12.05.2011 / 07:00
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Massive government economy measures depress quarterly earnings
- Revenue increases slightly to 5.7 billion euro
- EBITDA decreases 11.7 million to 141.5 million euro
- Pressure on earnings to the sum of 29 million euro as the result of
government economy interventions
- Strengthening of the non-regulated service business
Stuttgart, 12 May 2011. Celesio, one of the leading international service
providers within the pharmaceutical and healthcare markets has, in the
first quarter of 2011, slightly increased revenue by 1 per cent to 5,722.9
million euro compared to the previous year. Adjusted for portfolio and
exchange rate effects, group revenue fell by 0.3 per cent. Operating profit
(EBITDA) fell by 11.7 million euro (7.6 per cent) to 141.5 million euro.
Government measures, in particular the reduced reimbursement rates for
generics in the United Kingdom, depressed earnings by 29 million euro in
the first quarter alone. However, more than half these measures have
already been offset through efficiency improvements and organic growth. In
addition, start-up costs associated with building up the Swedish pharmacies
and the Medco Celesio joint venture depressed earnings.
'Already in the previous year, the pressures imposed by governmental
measures doubled in comparison with 2009. In the current year these will
further increase. The first quarter of 2011 shows clearly that the pressure
from government price interventions in the pharmaceutical sector cannot be
offset in the short-term by efficiency improvements either at the same time
or on their own,' says CEO and Chairman Fritz Oesterle. 'We will therefore
need to push forward our Agenda 2015, meaning an improvement in
profitability and in particular portfolio measures designed to transform
our business, with even greater emphasis. This is the only way in which we
will significantly increase the proportion of our non-price regulated
business as early as in the medium term. The financial latitude to achieve
a balanced portfolio of price-regulated and non-price regulated business
through acquisitions is in place.'
Development within the divisions
In the first quarter, the Patient and Consumer Solutions division generated
revenue of 862.7 million euro, which is 1 per cent more than in the
previous year (up 0.5 per cent when adjusted for portfolio and exchange
rate effects).
The division's EBITDA fell by 16.3 per cent to 49.8 million euro. This was
attributable to the deconsolidation of the Dutch pharmacies following the
contribution to Brocacef Holding, the planned development costs for the
pharmacy chain in Sweden, as well as operational and organisational costs
for the new management organisation DocMorris International Retail.
On 31 March 2011, Celesio operated 2,287 retail pharmacies and therefore 14
pharmacies fewer than in the previous year. In the first quarter of 2011,
Celesio opened ten pharmacies, of which eight pharmacies in Sweden. This
underlines the strategy of building on the market position by opening new
pharmacies to conserve capital and not expanding through acquisition. As a
result, last year already 50 pharmacies were opened in Sweden. No longer
included are the 63 Dutch pharmacies which were transferred last year as
part of a cooperation with Brocacef Holding, in which Celesio has a
minority holding.
In the most important pharmacy market, the United Kingdom, revenue was
maintained at the previous year's level despite weak consumer confidence
and government interventions. Lloydspharmacy contributed 59.4 per cent to
the Pharmacies business area's revenue in the first quarter. At the same
time, an increase in the volume of prescriptions and a double-digit growth
rate in revenues from non-regulated services were achieved.
The new brand strategy in the Patient and Consumer Solutions division is
successfully being implemented since the first quarter. Celesio will in
future concentrate on two pharmacy brands: Lloydspharmacy in the United
Kingdom and DocMorris outside the United Kingdom. In Ireland, rebranding of
the existing pharmacies into DocMorris has already begun.
The brand strategy and retail business will also be strengthened by the new
appointment to the management board department for the Patient and Consumer
Solutions division. Stephan Borchert will assume responsibility for this
department within the Celesio Management Board at the latest by 1
September. He has broad experience in international retail.
Revenue in the Pharmacy Solutions division increased by 0.9 per cent to
4,703.6 million euro. The majority of this can be attributed to the
Wholesale business area where revenue increased by 0.9 per cent to 4,702.4
million euro. Adjusted for portfolio and exchange rate effects, revenue in
the Pharmacy Solutions division fell by 0.5 per cent, primarily due to the
government measures in Germany as well as the weak market development and
the continuing pressure of competition in France.
It was possible to increase the division's EBITDA by 3.3 per cent to 111.5
million euro. Adjusted for portfolio and exchange rate effects, this
corresponds to an increase of 0.3 per cent compared with the previous year.
The good performance in Brazil and the United Kingdom was not able to fully
offset the burdens in France and Germany caused by competition and
regulations.
On 31 March 2011, Celesio operated 133 wholesale branches. This is three
fewer than at the end of the closing date of the previous year, due to the
continuous optimisation of the branch structure.
Gross profit for the Manufacturer Solutions divisions remains, at 99.4
million euro, at the same level as in the previous year. In the Logistics
Solutions business area, to which Movianto belongs, it was possible to
increase gross profit by 7.9 per cent to 46 million euro. The Marketing
Solutions business area, to which Pharmexx belongs, contributed 52.9
million euro to the division's gross profit.
The division's EBITDA was 2.8 million euro (down 29.7 per cent compared
with the same period in the previous year). This decline is due on the one
hand to the planned start-up costs at Medco Celesio, and on the other hand
due to contract losses in the United Kingdom in the Logistics Solutions
business area which it has not yet been possible to offset. In the
Marketing Solutions business area, EBITDA increased by 28 per cent to 2.1
million euro.
Financing
Given the attractive market environment, Celesio on 29 March 2011 placed a
convertible bond to the volume of 350 million euro with a term of seven
years. This has further secured the long term group financing and at the
same time further diversified sources of financing and the investor base in
the direction of the capital market. With this convertible bond, Celesio
has furthermore extended the financial latitude for implementation of the
growth strategy. This applies in particular with respect to the planned
transformation of the business to new, cross-sector services and to a
balanced proportion of price-regulated and non-price regulated activities.
Profit forecast
The additional government economy measures compared with the previous year
will have a significant effect on earnings in the 2011 fiscal year. The
currently foreseeable effects will reduce group EBIDTA by at least 100
million euro. Celesio expects, however, that the development in other
divisions and the initiatives to improve profitability will succeed in
offsetting these government measures to the greatest possible extent. At
the same time, we assume stable exchange rate relations in comparison to
the end of March 2011.
With the initiatives in all growth pillars of Agenda 2015 Celesio has
-despite governmental interventions in the core business - the right tools
and levers to achieve both the strategic and the growth goal of Agenda
2015. At the same time, measures in the 'Portfolio Optimisation' and
'Innovation' pillars could also become crucial in terms of progression of
the 2011 fiscal year.
Key figures of the Celesio Group
Q1 Q1
2010 2011
Revenue EUR m 5,668.3 5,722.9
EBITDA EUR m 153.2 141.5
Earnings
before tax EUR m 91.2 82.5
Net profit EUR m 59.5 54.7
Earnings per share EUR 0.34 0.31
Employees* 36,433 36,424
Retail pharmacies 2,301 2,287
Wholesale
branches* 136 133
Change on Change adjusted
EUR for portfolio
basis and currency-
effects
% %
Revenue 1.0 -0.3
EBITDA -7.6 -7.1
Earnings
Before tax -9.6 -
Net profit -8.1 -
Earnings per share -8.8 -
*Values refer to the date at the end of the reporting period
Press contact:
Dr Jens Schreiber, Celesio AG, +49 (0)711.5001-380
media@celesio.com
Rainer Berghausen, Celesio AG, +49 (0)711.5001-549
media@celesio.com
About Celesio Group:
Celesio is one of the leading international service providers within the
pharmaceutical and healthcare markets. We are active in 27 countries
worldwide and employ more than 36,000 employees in our three divisions
Patient and Consumer Solutions, Pharmacy Solutions and Manufacturer
Solutions. Approximately 2,300 of Celesio's own retail pharmacies, as part
of Patient and Consumer Solutions, serve over 550,000 customers every day.
In our wholesale activities, the core business of Pharmacy Solutions,
around 130 wholesale branches deliver to more than 65,000 pharmacies - day
in, day out. In the Manufacturer Solutions division, we offer
pharmaceutical manufacturers logistics, marketing and sales solutions and
operate in the area of Efficient Care Pharma.
End of Corporate News
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Language: English
Company: Celesio AG
Neckartalstr. 155
70376 Stuttgart
Deutschland
Phone: +49 (0)711 5001-735
Fax: +49 (0)711 5001-736
E-mail: investor@celesio.com
Internet: www.celesio.com
ISIN: DE000CLS1001
WKN: CLS100
Listed: Regulierter Markt in Berlin, Düsseldorf, Frankfurt (Prime
Standard), München, Stuttgart; Freiverkehr in Hamburg,
Hannover; Terminbörse EUREX
End of News DGAP News-Service
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124182 12.05.2011
DGAP-News: Celesio AG: Massive government economy measures depress quarterly earnings
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