04.08.2008:
Zentiva produces strong first half results
Successful integration of the our Turkish business and Focus on Efficiency Leads to 40.1% increase in EBIT to CZK 1,555.0 million1)
Prague, London, August 4, 2008 – Zentiva N.V. (‘Zentiva’ or the ‘Company’), a leading CEE pharmaceutical company that develops, manufactures and markets modern branded generic pharmaceutical products announces its results for the first half of 2008.
Zentiva’s results for the first six months of 2008 clearly show that management is delivering on its two key targets, top line growth and enhanced profitability. During the period sales have increased by 32.3%, driven by the Eczacibasi Zentiva business, which was acquired in Turkey in July 2007. Higher sales were also achieved in Russia, Poland, the Ukraine, other countries of the CIS, Bulgaria and Hungary. First half sales would have been 42% higher on a constant exchange rate basis.
In the first half of 2008, Zentiva increased EBIT by 40.1% to CZK 1,555.0 million1) due to the actions that management has taken since late 2007 to successfully integrate its new Turkish business, enhance the efficiency of its commercial operation and to further streamline its vertically integrated supply chain. EBIT in Q2 2008 rose by 113.0% to CZK 745.4 million1).
Zentiva has confirmed, based on these strong first half results, its full year guidance for 2008.
Financial Highlights
- Net sales CZK 8.990.3 million; + 32.3% yoy, driven by the consolidation of the Turkish business Eczacibasi Zentiva, acquired in July 2007.
- Gross profit CZK 5.306.2 million; +20.1% yoy, due to the lower margins of Eczacibasi being only partially offset by the continued improvement of our product mix
- EBIT CZK 1,555.0 million1), +40.1% yoy due to improved operating efficiencies, particularly in the commercial area. EBIT margin of 17.3%.
- EBIT CZK 1,363.7 million, +22.9% yoy, including CZK 191.3 million fixed assets impairment charge. EBIT margin of 15.2%;
- Net profit CZK 987.5 million1), +18.8% yoy due to the higher financial costs related to the acquisition in Turkey. Net profit margin 11.0%.
- Net profit (including impairment of fixed assets) CZK 833.0 million; a 0.2% increase yoy. Net profit margin 9.3%;
- Capital expenditure during the first half of 2008 amounted to CZK 554.0 million representing 6.2% of sales
- Free cash flow for the six month period was (FCF) of CZK 1,115.7 million representing 81.8% EBIT Cash conversion
- Net debt to equity ratio of 126.8% as of June 30, 2008
1) Excluding Impairment of fixed assets
Jiří Michal, Chairman of the Board and CEO, commenting today on the Company’s First Half results said:
“Our first half results clearly show that Zentiva is achieving growth whilst at the same time making good progress in improving the efficiency of all aspects of its much enlarged business.
In Turkey, we are pleased with the pace of integration of Eczacibasi-Zentiva into the Group. We have taken a number of important steps to improve margins including radically changing the products that are actively promoted, as well as increasing our overall sales force efficiency. The results that we have already achieved gives me great confidence that we will deliver both improved sales and profits in Turkey in 2008 and that this market will be an important contributor to our growth over the next several years.
In the Czech Republic, our sales have as anticipated, come under pressure from the introduction of mandatory fees for Doctors’ visits and prescriptions at the beginning of the year. However we have been able to respond to these developments by placing more efforts in this market on our promoted prescription and CHC brands and maintaining our overall commercial efficiency. Taken together these actions have allowed us to partly offset the top line pressures we have experienced and have put us in a position to benefit from the more stable market conditions we see in the second half of 2008.
In Romania, our sales were lower, as had been expected, due in part to the challenging year on year comparison and the adverse impact of the stronger Czech Koruna. The operational changes that we have made in the last nine months mean that we now have a much leaner and more focused organization that is well positioned to deliver higher sales and earnings in Romania in the second half of 2008.
Elsewhere our businesses have done well against a background of challenging market conditions and adverse currency developments. We have grown sales in Russia, Poland, and Bulgaria, as well as in most of our newer markets including the Ukraine and Hungary.
Our progress in 2008 to-date demonstrates the potential of the much enlarged better balanced Zentiva organization that was created in 2007. With access to a much increased patient population, further important opportunities to generate economies of scale and our continuing focus on efficiency I am confident that Zentiva will deliver our guidance for 2008 and generate attractive returns for shareholders in the years to come.”
Commenting to the unsolicited offers which have been made for the Company, Jiří Michal added:
"Zentiva has a strong future as an independent business and I have great confidence in the Company’s ability to execute the current business plan to generate strong returns for shareholders.
The Board will always evaluate any proposals that we receive, and is pro-actively exploring opportunities to maximise value for shareholders and other stakeholders.
IMPORTANT NOTICES
Forward-looking Statements
This document contains “forward-looking statements”. These forward-looking statements include all statements that are not historically known facts. They appear in a number of places throughout this document and include, but are not limited to, statements and underlying assumptions regarding Zentiva’s intentions, beliefs, projections, plans, objectives, estimates, and current expectations concerning, amongst other things, Zentiva’s results of operations, financial condition, liquidity, performance, prospects, growth, strategies, and the countries and industries in which Zentiva operates. Forward-looking statements are generally identified by the words "expects," "anticipates," "believes," "intends," "estimates," "plans" and similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, many of which are difficult to predict and generally beyond the control of Zentiva. Forward-looking statements are not guarantees of future performance, and the actual results of Zentiva’s operations, financial condition, liquidity, performance, prospects, growth, strategies, and the development of the countries and the industries in which Zentiva operates may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. Other than as required by applicable law, Zentiva does not undertake any obligation to update or revise any forward-looking information or statements.
Other Important Notices
This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or global depositary shares in Zentiva, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.
Recipients of this document, or any part or any copy of it, may not, directly or indirectly, take, or transmit into, or further distribute the document in, the United States, Canada, Australia, or Japan, or to any resident thereof. The distribution of this document in other jurisdictions may also be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of US, Canadian, Japanese, Australian or other securities laws.
Zentiva’s ordinary shares and global depositary shares have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) and may not be offered or sold in the US except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
For the purpose of Section 21 of the Financial Services and Markets Act 2000 of the United Kingdom (the “FSMA”), any potential invitation or inducement to engage in any investment activity included within this document (which Zentiva believes there is none) is directed only at (i) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) of the United Kingdom (the “Financial Promotion Order”); (ii) persons who fall within Articles 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order; and (iii) any other persons to whom this document for the purposes of Section 21 of FSMA can otherwise lawfully be made (all such persons together being referred to as “relevant persons”), and must not be acted on or relied upon by persons other than relevant persons. Any potential invitation or inducement to engage in any investment activity included within this document (which Zentiva believes there is none) is available only to relevant persons and will be engaged in only with relevant persons.
This document is published in both English and Czech version, however, only its English version should be considered the official one. Its Czech version is published solely for information purposes, and no representation is made and no warranty is given as to the accuracy of the Czech translation. Should there be any difference between the English and Czech version of this document, the English version shall always prevail.
NOTE FOR EDITORS
Zentiva N.V. is an international pharmaceutical company focused on developing, manufacturing and marketing modern generic pharmaceutical products. The Company has leading positions in the pharmaceutical markets in the Czech Republic, Slovakia, Romania, and Turkey and is growing rapidly in Poland, Russia, Bulgaria, Hungary, the Ukraine and the Baltic States. Zentiva’s strategy is to further this growth by increasing patient access to modern medicines through primary care providers within the EU and Eastern Europe. This growth will be based on further organic development of Zentiva’s existing business and through selective acquisitions, whilst maintaining profitable growth.
The Company addresses a wide range of therapeutic areas but has a particular focus on cardiovascular disorders, inflammatory conditions, pain, infections and diseases of the central nervous system and the gastrointestinal and urology fields.
The Zentiva Group employs over 6,000 people and has production sites in the Czech Republic, Slovakia, Romania, and Turkey.
Zentiva is listed on the Prague and London Stock Exchanges. Based on official notifications by shareholders to the Dutch regulator, the Company’s largest shareholders are Sanofi-Aventis (24.9%), PPF Group and Generali PPF Holding B.V. acting in concert (19.2%) and Fervent Holdings Limited (7.6%). Zentiva’s management holds 5.9% of the Company shares. Other institutional and private investors hold a combined 42.4% of Company shares.
You can download the press release (PDF file, 216 kB).
|
 |