The Slovenia Times

Krka reports record sales in H1, appoints two supervisors


Its shareholders meanwhile appointed two new supervisors and confirmed a dividend payout of EUR 2.75 gross per share.

According to a report discussed by Krka supervisors and presented at the annual general meeting on Thursday, the bulk of the sales were generated in foreign markets, where the sales reached EUR 612.1m or 93% of the group's total sales.

The estimated earnings before interest and taxes (EBIT) stood at EUR 122.4m, which is 30% more than in the first half of 2016, while earnings before interest, taxes, depreciation, and amortisation (EBITDA) were up 20% to EUR 176.9m.

The group's pre-tax profit between January and June reached EUR 109.2m, which is a 35% growth at the annual level.

In the fist six months of the year, the group sold EUR 548.2m in prescription drugs to exceed last year's result in the same period by 10%. Sales of non-prescription medications were up by 8% to EUR 54.2m.

The group's investments this year have so far reached EUR 120m, which is less than planned, and also less than in the first half of 2016.

At the end of June, the Krka group employed 10,842 people, which is 1% more than at the end of last year. The company's stock on the Ljubljana Stock Exchange was meanwhile down by 2.5% in the period.

Krka CEO Jože Colarič noted that the first half profit equalled 84% of the group's total profit last year, responding in a way to the criticism, mainly from the Slovenian Sovereign Holding (SSH), related to the declining profitability and return on equity and stagnating sales.

Colarič said that one can establish that Krka decreased its profitability last year compared to 2015 "if you are a bit evil", noting that five-year comparisons of profit trends showed a completely different picture.

Krka shareholders meanwhile appointed two new supervisors at today's AGM - insurance company Modra zavarovalnica boss Borut Jamnik and Hans-Helmut Fabry, a former chairman of the German arm of the pharmaceutical multinational Novartis.

The shareholders holding a total of 55.3% of voting rights also decided to allocate EUR 88.7m of the EUR 142.7m in distributable profit from 2016 for dividends at EUR 2.75 gross per share. This is ten cents more than last year.

At the AGM in Otočec, Krka CEO Jože Colarič announced that Krka was about to take over a company in China. "A target was identified at the end of last year in which we could gain at least a 51% ownership stake," Krka said in a press release.

The target is a small company dealing with pharmaceutical development, which has an extensive know-how in regulation and has certain capacity of producing pills, suspensions and syringes.

Its annual sales stand at less than EUR 10m, Krka said, adding that it could serve as an entry point to the Chinese market. The takeover procedure is expected to be wrapped up by the end of summer.

Colarič said that Krka started eyeing China last year as a fast-growing pharmaceutical market, adding that the takeover would shorten the time of the company's entry to the Chinese market, which is expected to happen by 2020.


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