EASTPHARMA LTD.
London, 9 November 2012 - EastPharma (EAST LI), a company active in the manufacturing and marketing of pharmaceutical products in Turkey and in other regional markets, announces its 9M 2012 sales performance and a review of its main subsidiary DEVA Holding's financial statements for the related period.
Management comment on the sales performance of EastPharma is provided in the attachment, and a presentation of the results will be available on the EastPharma website www.eastpharmaltd.com on 12 November 2012.
A conference call to review the 9M 2012 sales performance will be hosted by the management of EastPharma at 4:00pm London time on 12 November 2012 (11:00am New York / 5:00pm Zurich time / 6:00pm Istanbul time). The dial-in details are provided below.
Conference call:
Dial-in Number (UK): + 44 (0)20 7162 0077
Dial-in Number (US): + 1 877 491 0064
Dial-in Number (Switzerland): + 41 (0)434 5692 61
Dial-in Number (Germany): + 49 (0)695 8999 0507
Conference ID: 924313
For further information, please contact:
Investor Relations:
email: ir@eastpharmaltd.com
SALES UPDATE AND MANAGEMENT REVIEW
EASTPHARMA'S PERFORMANCE (According to IMS data) COMPARED TO TURKEY'S OVERALL 9M 2012 MARKET PERFORMANCE
According to IMS Health data, a total of 1.325bn units of drugs, worth TRY 10.8bn (USD 5.98bn), were sold in the Turkish Pharmaceutical market in 9M 2012.
In unit sales terms the Turkish market grew by 2.2% in 9M 2012, while EastPharma's unit sales declined by 11.1% compared to the previous period, falling to 67.3mn units sold according to IMS figures. With this reduction in unit sales Eastpharma's market share in unit terms decreased from 5.8% in 9M 2011 to 5.1% in 9M 2012 and the company maintained its 4th place ranking in the Turkish pharmaceuticals market.
By sales value in Turkish Lira, the national market declined by 6.9% in 9M 2012 compared to 9M 2011. According to IMS figures for 9M 2012, EastPharma achieved sales worth TRY 401.7mn (USD 222.9mn), a decrease of 18.5% compared to the previous period. Consequently, EastPharma market share decreased by value from 4.3% in 9M 2011 to 3.7% in 9M 2012 and the company has moved down the national ranking from 5th to 6th place.
MANAGEMENT COMMENTS ON SALES PERFORMANCE FOR EASTPHARMA IN 9M 2012 (IFRS):
According to IFRS results, revenue in 9M 2012 was USD 170.8mn, down 14.1% from the same period in 2011 (USD 198.8mn). In TRY terms, the decrease in revenue was 4.7% for the same period. (TRY net sales in 9M 2012 was TRY 306.5mn vs TRY 321.7mn net sales in 9M 2011)
The average USD/TRY exchange rate increased by 10.9% to 1.7942 in 9M 2012, which compares with an average rate of 1.6181 in 9M 2011. The USD/TRY exchange rate was 1.8889 on 31 December 2011, while it was 1.7847 on 30 September 2012: this corresponds to a decrease of 5.8%.
EastPharma's sales decrease was driven by decreased volumes in DEVA's Human Pharma Products businesses. In 9M 2012 versus 9M 2011, Human Pharma revenues decreased by 13.8% (from USD 181.6mn to USD 156.6mn).
MANAGEMENT COMMENTS ON CAPITAL MARKET BOARD (CMB) FINANCIAL PERFORMANCE FOR DEVA 9M 2012:
Deva's Capital Markets Board (CMB) results show revenue in 9M 2012 was TRY 309.4mn, down 4.9% from the same period in 2011 (TRY 325.3mn).
Deva's sales decrease in TRY terms was mainly due to decreased volumes at Deva's Human Pharma businesses. In 9M 2012 versus 9M 2011, Human Pharma revenue decreased by 4.6% (from TRY 297.6mn to TRY 284.0mn). Veterinary Products revenue decreased by 7.5% (from TRY 22.5mn to TRY 20.8mn)
Deva's gross profit in 9M 2012 was TRY 126.7mn, up from TRY 119.2mn in 9M 2011. The gross profit margin in 9M 2012 was 41% vs 37% in 9M 2011.
EBITDA in 9M 2012 was TRY 65.2mn vs TRY 53.5mn in 9M 2011 representing an EBITDA margin of 21.1% vs 16.4% in 9M 2011. It should be noted that during 9M 2011 the company booked some extraordinary items, notably a gain on the reversal of a tax penalty totaling TRY 9.2mn and a gain on the bargain purchase of Zentiva's API Plant totaling USD 9.7mn. After adjustment for these extraordinary items EBITDA was TRY 34.6mn, which corresponds to an EBITDA margin of 10.6%.
Operating expenses in 9M 2012 decreased by 19%, from TRY 99.7mn to TRY 80.9mn. The ratio of operating expenses to revenues decreased to 26.1% from 30.7% compared to 9M 2011. Sales and marketing expenses in 9M 2012 were 18% of revenues; general administrative expenses were 7% of revenues. These expenses were 23% and 7% in 9M 2011, respectively.
Finance expense decreased by TRY 24mn, from TRY 78.9mn to TRY 54.9mn in 9M 2012 compared to 9M 2011. This was primarily due to foreign exchange gain / losses on borrowings: Deva made a foreign exchange gain of TRY 5.5mn in 9M 2012, compared to a loss of TRY 26mn in 9M 2011 on borrowings. Average interest rates in 9M 2012 were around 12%, compared to 9% in 9M 2011.
Receivable days at 30 September 2012 were 124 days, compared to 126 days as at 31 December 2011.
Philipp Haas, EastPharma's Chairman and CEO, said; "Even though the development of our top line has been hit by the generally significantly lower prices and intensive competition, we are very pleased with the result of the third quarter in terms of profitability. At Deva level, it is very encouraging to see that operating profit as well as net profit before and after tax showed marked improvement in the 3rd quarter this year when compared to the 3rd quarter of the previous year. This is very important because the last pricing effect was not in place in the 3rd quarter 2011. It is a clear indication of the operational progress we have made by aggressively and permanently cutting our cost bases on one hand and by launching new products with a higher value added on the other hand. We are also very pleased to see that the good results of the last two quarters were continued into the third quarter, which seasonally is normally our weakest quarter.
While the 3rd quarter results are very positive, we have no reason to slow down our dynamic new product development strategies. Competition in the Turkish market is becoming more and more intensive, which continues to provide for a very challenging operating environment. Therefore, the introduction of either new products or products with unique features is becoming more and more important. For this reason, we will further increase our efforts in R&D, for which we are formulating very ambitious plans for the future."