STADA Arzneimittel AG / Half Year Results
13.08.2008
Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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Important items at a glance
H1/2008: Preliminary results confirmed satisfactory growth despite
difficult market environment:
o Group sales EUR 822.8 million (+12%)
o Operating profit EUR 109.5 million (+8%) or adjusted EUR 114.4
million (+10%)
o Earnings before taxes (EBT) EUR 88.1 million (+3%) or adjusted EUR
92.0 million (+4%)
o Net income EUR 64.7 million (+11%) or adjusted EUR 67.2 million
(+14%)
Outlook: from todays perspective the Executive Board expects
o subdued growth dynamic in H2/2008
o significant growth in sales and earnings for the years to come
The financial figures, published by STADA Arzneimittel AG today, on August
13, 2008, in the report on the first six months of 2008 unconditionally
confirm the preliminary results (see the companys ad hoc release from July
28, 2008). Accordingly, as expected, STADA was exposed to a difficult
market environment in various national markets in the first half of 2008.
'Despite difficult framework conditions we were once again able to achieve
double-digit growth in sales as well as in net income. Under the particular
circumstances this is a satisfactory result' said Hartmut Retzlaff,
Chairman of the Executive Board of STADA Arzneimittel AG.
In the outlook, the Executive Board assumes that the business trends will
recover in several national markets as compared to the first half of 2008,
but that overall the Groups business results in the second half of 2008
will be characterized by a subdued growth dynamic particularly compared
to the operationally very good second half of 2007. However, from todays
perspective the Executive Board expects again significant growth in sales
and earnings in the years to come.
Sales and earnings development of the STADA Group
Group sales increased by 12% to EUR 822.8 million in the first six months
of the current fiscal year (first half of 2007: EUR 737.4 million). Sales
of STADAs international business activities recorded an increase of 18% to
EUR 525.4 million in the reporting period (first half of 2007: EUR 446.4
million), thus rising once again at a higher rate as compared to Group
sales. In the first six months of 2008 sales achieved by the Group outside
Germany had a share of 63.9% (first half of 2007: 60.5%) of Group sales.
Generics, which continues to be the significantly larger core segment
(share in Group sales in H1/2008: 68.3%), recorded sales growth of 1% to
EUR 561.7 million in the reporting period (first half of 2007: EUR 554.9
million). Sales of the core segment Branded Products (share in Group sales
in H1/2008: 22.7%) showed an increase of 31% to EUR 186.4 million in the
first half of 2008 (first half of 2007: EUR 142.1 million).
In net income, STADA recorded an increase of 11% to EUR 64.7 million in the
reporting period (first half of 2007: EUR 58.3 million). Earnings per share
in the first six months of 2008 amounted to EUR 1.10 (first half of 2007:
EUR 1.00) and diluted earnings per share in the first six months of the
current fiscal year amounted to EUR 1.06 (first half of 2007: EUR 0.96).
The other earnings figures recorded the following growth rates in the first
six months of 2008 as compared to the first half of 2007: operating profit
by 8% to EUR 109.5 million (first half of 2007: EUR 101.6 million),
earnings before taxes (EBT) by 3% to EUR 88.1 million (first half of 2007:
EUR 85.5 million), earnings before interest and taxes (EBIT) by 9% to EUR
110.6 million (first half of 2007: EUR 101.6 million) and earnings before
interest, taxes, depreciation and amortization (EBITDA) by 7% to EUR 148.9
million (first half of 2007: EUR 139.5 million).
Overall, these earnings figures are thereby burdened by one-time special
effects in the amount of EUR 3.9 million before taxes and EUR 2.5 million
after taxes (first half of 2007: burden in the amount of EUR 2.6 million
before taxes and EUR 0.9 million after taxes). Net income adjusted for
special effects thus reached EUR 67.2 million in the first half (first half
of 2007: EUR 59.2 million), being by 14% above the same period in the
previous year.
Operating profit in the Generics segment amounted to EUR 77.2 million in
the first half of 2008 (first half of 2007: EUR 100.5 million), thus
resulting in a sales-related operating segment margin for Generics of 13.7%
(first half of 2007: 18.1%). The Branded Products segment recorded an
operating segment profit of EUR 36.4 million in the reporting period (first
half of 2007: EUR 24.2 million), corresponding to an operating segment
margin for Branded Products of 19.5% (first half of 2007: 17.1%).
Regional development in the STADA Group
Despite mixed business development, STADA increased sales in the Groups
ten largest national markets by a total of 13% in the first half of 2008.
In Germany, which continues to be STADA's biggest national market, sales
rose by 2% to EUR 297.4 million in the first half of 2008 (first half of
2007: EUR 291.0 million). Thus, German business activities contributed
36.1% to Group sales in the reporting period (first half of 2007: 39.5%).
In this context, sales in the Branded Products segment in Germany went up
by 26% to EUR 65.9 million in the first half of 2008 (first half of 2007:
EUR 52.2 million) also due to stockpiling on the part of distribution
channels in advance of price increases for significant parts of the
portfolio of this segment as of July 1, 2008 while sales in the Generics
segment decreased by 4% to EUR 227.9 million (first half of 2007: EUR 236.9
million).
According to data provided by IMS Health, with 11.4% the STADA Groups
market share in the German generics market in the first half of 2008 was
higher than the market share in the first six months of 2007, with 10.8%.
In the Generics segment the Groups individual sales labels showed very
different business developments, also in the second quarter and thus also
overall for the reporting period of the first half year.
The sales label ALIUD PHARMA, which traditionally operates in the market
without a sales force, based on mailing concepts and which thus, due to
low-price cost structures, is able to pursue more price-aggressive sales
strategies, reported a sales increase of 26% to EUR 122.0 million in the
first half of 2008 (first half of 2007: EUR 96.5 million). This label has
thereby become the strongest German generics label in terms of sales in the
STADA Group and occupies position 3 in the German generics market.
The STADA Groups classic generics sales label in Germany, STADApharm,
which, after the restructuring of sales activities in the fourth quarter of
2007 now operates without its own doctors-related sales force, recorded a
sales decrease of 26% to EUR 96.3 million in the first half of 2008 (first
half of 2007: EUR 129.9 million) and was thus below the original
expectations. In the German generics market this label occupies position 4.
Another Generics sales label from the STADA Group in Germany, cell pharm, a
special supplier for the indication areas oncology, nephrology and
diabetes, also suffered from the structural market changes in Germany in
the first half of 2008. With sales decreasing by 11% to EUR 9.1 million
(first half of 2007: EUR 10.3 million), particularly the profitability of
cell pharm was also clearly below expectation, considering that for the
market launch of the Groups first biosimilar, silapo® (active ingredient
Epo-zeta), on February 1, 2008, significant marketing and sales expenses
were incurred for this label in the first half of 2008. For this reason the
Executive Board launched a sales realignment for this sales label in the
second quarter of 2008. As a result, the Executive Board expects a revival
of cell pharm sales for the second half of 2008. In this context, an
important role will be played by the expected sales increase of silapo®,
even if application restrictions for all Erythropoietin products in the
oncology indication area currently imposed by regulatory authorities will
probably subdue the sales increase of silapo® in this indication area.
Overall the Executive Board expects a revival of demand for STADAs
generics labels in the second half of 2008. However, this revival in demand
is opposed by an increased margin pressure. In the course of the
establishment of new reference prices as well as new co-payment exemption
limits for numerous active pharmaceutical ingredients as of June 1, 2008
and, thus, competitive price pressure arising in the current quarter, ALIUD
PHARMA reduced the prices comprehensively and thereby stronger than
originally expected not only to the amount of the new reference prices, but
to the clearly lower level of the co-payment exemption limits, while
STADApharm responded to this lower price level of co-payment exemption
limits for individual products only. In addition, the German generics
labels are faced with demands by health insurance organizations to
significantly increase the discount level for existing discount agreements.
For both labels STADA is prepared to respond actively to competitive
pressure by means of further significant price reductions in the remaining
course of the year.
Moreover, the Executive Board does not rule out that new discount
agreements, also based on individual active ingredients, could be tendered
in the German market to a notable extent as well as that further legal
challenges of new or existing discount agreements could occur. This would
be associated with a further increased margin pressure and/or significant
sales and earnings risks due to legally uncertain framework conditions.
Overall, against the backdrop of the developments of the individual
generics labels shown, also in case of the expected revival of the German
business in the second half of 2008 it is questionable, from todays
perspective, whether the profitability in Germany in fiscal year 2008 as
usual in the past years will still be in Group average.
In Russia STADA increased sales in the first half of 2008 also due to the
inclusion of acquired sales from CJSC Makiz-Pharma which has been
consolidated in the Group only since September 2007 in the amount of RUB
869.8 million or EUR 23.7 million by 66% in local currency or by 54% in
Euro to a total of EUR 76.1 million (first half of 2007: EUR 49.3 million).
In this context, organic growth in Russia for the first six months of 2008
amounted to 14% in local currency and 6% in Euro. Thus, Russia now is the
second largest national market for STADA.
In Serbia, the Group recorded sales growth of 2% in local currency in the
first half of 2008, while sales in Euro of EUR 65.4 million were at the
level of the previous year (first half of 2007: EUR 65.7 million); by
considering disposals made there since then sales growth was 8% in local
currency or 5% in Euro to EUR 65.4 million (first half of 2007: EUR 62.3
million).
In the United Kingdom sales recorded growth of 207% in local currency or of
166% in Euro to EUR 62.3 million in the first six months of 2008 (first
half of 2007: EUR 23.4 million) through the inclusion of the Forum
Bioscience Group, which has been consolidated in the STADA Group since
October 2007. However, parts of the local STADA sales companys original
Generic portfolio have been exposed to significant price pressure due to
regulation and competition since the first quarter of 2008, which will lead
to a longer term reduction in sales and earnings of these products.
Against the backdrop of a still difficult market environment, sales in
Belgium in the first half of 2008 decreased by 2% to EUR 55.7 million
(first half of 2007: EUR 56.5 million). Due to the ongoing government
crisis, STADA now no longer assumes that generics-stimulating measures will
be taken in Belgium in the foreseeable future. Thus, a significant revival
of demand in the Belgian generics business can no longer be expected in the
current year.
In Italy, sales went up by 5% to EUR 54.8 million in the reporting period
(first half of 2007: EUR 52.1 million). By taking into account the
disposals and abandoned commercial activities the adjusted sales increase
in Italy in the first half of 2008 was 10%.
In France, STADA achieved pleasing sales growth of 21% to EUR 44.4 million
in the first six months of 2008 (first half of 2007: EUR 36.8 million).
Here, the numerous product launches in the previous 18 months significantly
increased sales, even if an intense discount competition in the pharmacy
distribution channel continues to be noticeable in this market.
In Spain, sales increased only slightly by 1% to EUR 34.0 million in the
first half of the current fiscal year (first half of 2007: EUR 33.8
million) primarily due to intense discount competition as well as
regulatory-related price reductions. Here the Executive Board continues to
expect, also in the course of fiscal year 2008, clear sales and margin
pressure.
In the Netherlands STADA recorded mainly due to price reductions a
sales decrease of 5% to EUR 19.4 million in the reporting period (first
half of 2007: EUR 20.5 million).
In Ireland sales increased acquisition-related by 55% to EUR 14.5
million in the first half of 2008 (first half of 2007: EUR 9.3 million).
In the Asian countries, the business development was mixed in the first six
months of 2008 and overall led to a sales increase of 8% to EUR 23.1
million (first half of 2007: EUR 21.4 million). A clear sales increase in
Kazakhstan and in the Philippines was opposed by sales reductions in
various Asian markets, such as in the Chinese market, after local tenders
were not won again as well as negative currency effects.
Continuous product launches through well-filled product pipeline
Overall, STADA launched 216 individual products worldwide in the first half
of the current fiscal year (first half of 2007: 192 product launches) in
individual national markets. Also for future launches, STADAs product
pipeline continues to be well-filled, particularly in the development focus
Generics.
Financial position and cash flow
In the Executive Boards view, the STADA Groups financial position
continues to be stable. The equity-to-assets ratio was 36.2% as of June 30,
2008 (December 31, 2007: 36.6%) and thereby remains clearly, from the
Executive Boards perspective, in a satisfying area of above approx. 30%.
Thus, the Group continues to have sufficient financial means. Net debt
amounted to EUR 1,064.9 million on the reporting date June 30, 2008
(December 31, 2007: EUR 958.5 million).
The Group recorded a gross cash flow of EUR 102.7 million in the first six
months of the current fiscal year (first half of 2007: EUR 99.0 million).
Cash flow from operating activities amounted to EUR -1.4 million in the
first half of 2008 (first half of 2007: EUR 4.3 million); adjusted for
special effects from payments made or still outstanding from acquisitions
and disposals, cash flow from operating activities reached EUR 2.4 million
in the first half of 2008 (first half of 2007: EUR 29.3 million).
Active acquisition policy
In the future too, STADA intends if suitable objects at an appropriate
price present themselves to continue the active acquisition policy of
recent years to further accelerate Group growth.
If such acquisitions too strongly burdened the equity-to-assets ratio,
appropriate capital measures continue to be imaginable to create a
sufficient financial framework for corresponding acquisition projects.
Outlook
Even if various Group companies must continue to operate in a challenging
environment with far-reaching regulatory measures, intensive competition
and significant pressure on margins, the Executive Board deems chances as
good for the Companys further business development in the years to come.
The basis for these chances is STADAs strategic focusing on growth markets
as well as the Groups proven operative strengths which are comprehensively
presented in the Annual Report 2007.
In the outlook for the current fiscal year, the Executive Board assumes
that the business trends will recover in several national markets as
compared to the first half of 2008, but that overall the Groups business
results in the second half of 2008 will be characterized by a subdued
growth dynamic particularly compared to the operationally very good
second half of 2007.
Against this backdrop the Executive Board expects, from todays
perspective, once again clear sales growth within the Group for fiscal year
2008; it is unclear, however, whether the growth rate will again be in the
double digit percentage range.
In terms of earnings, the Executive Board assumes, from todays
perspective, that net income 2008 will again show clear 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, probably not be achieved in fiscal year 2008
(see the companys ad hoc release from July 28, 2008).
The Executive Board has reacted to the subdued growth dynamic through
operative measures. 'We realign various Group units in terms of sales and
revise the Groups objectives for continuous cost optimization. Beyond that
we continue to seek suitable acquisition objects. Against this backdrop,
from todays perspective we are optimistic that STADA, despite conditions
that remain challenging, will once again achieve significant growth in
sales and earnings in the years to come', said Retzlaff of the Groups
outlook.
Further information:
STADA Arzneimittel AG / Corporate Communications / Stadastrasse 218 /
D - 61118 Bad Vilbel / 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 13.08.2008
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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
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DGAP-News: STADA: satisfactory growth in H1/2008 subdued growth dynamic
| Source: EQS Group AG