Earnings Release • Apr 13, 2017
Earnings Release
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Regulated information Nazareth (Belgium)/Rotterdam (The Netherlands)1 , 13 April 2017
Hans Stols, Fagron CEO: "The sterile compounding activities in the United States and the activities in South America and Europe have developed positively in the last quarter. As a result of our strong, often leading, market positions within Europe, we were able to achieve turnover growth in almost all countries. The substantial strengthening of the Brazilian real relative to the US dollar has resulted in purchasing advantages for our activities in Brazil. Although our customers in Brazil benefited from lower sales prices, turnover increased at constant exchange rates. Our Brazilian activities were able to achieve significant growth in volume and to further strengthen its market leadership in Brazil.
Sales of pharmaceutical raw materials in the United States stabilised compared to the last quarter of 2016. This marks a clear turnaround compared to decreasing turnover during the last six quarters.
The new 503B compounding facility in Wichita (Kansas) has been operational since the end of March. The new facility is currently licensed in 43 states. As management, we are positive about the opportunities and potential this new facility offers. We anticipate that the facility will generate about 100 million US dollars of turnover within three to five years.
| Turnover (x € 1,000) | Q1 2017 | Q1 2016 | Total growth |
Total growth CER |
Org. growth | Org. growth CER |
|---|---|---|---|---|---|---|
| Fagron Europe | 63,023 | 61,023 | 3.3% | 3.0% | 3.3% | 3.0% |
| Fagron South America | 25,136 | 19,529 | 28.7% | 0.4% | 28.7% | 0.4% |
| Fagron North America | 19,995 | 20,026 | -0.2% | -3.6% | -0.2% | -3.6% |
| Fagron (excl. HL Technology) | 108,154 | 100,577 | 7.5% | 1.2% | 7.5% | 1.2% |
| HL Technology | 1,723 | 1,978 | -12.9% | -15.0% | -12.9% | -15.0% |
| Fagron Group | 109,877 | 102,556 | 7.1% | 0.9% | 7.1% | 0.9% |
| Divestment in France2 | - | 1,008 | - | - | - | - |
| Total | 109,877 | 103,563 | 6.1% | -0.1% | - | - |
For 2017, we remain positive about the opportunities in the various markets in which we are active."
CER = constant exchange rates
2 The divestment in France refers to the sale of a small compounding pharmacy in Marseille, as announced in the press release of 5 August 2016.
1. This press release was sent out by Fagron NV and Fagron BV.
Turnover of Fagron increased by 7.5% (+1.2% at constant exchange rates) to € 108.2 million in the first quarter of 2017. The following table summarises the turnover development and currency effects of Fagron in the first quarter of 2017 compared to the first quarter of 2016.
| (x € 1,000) | Impact |
|---|---|
| Turnover in Q1 2016 | 100,577 |
| Development Europe | 1,854 |
| Development South America | 70 |
| Development North America | -712 |
| Currency effect Brazilian real / euro | 5,469 |
| Currency effect US dollar / euro | 681 |
| Currency effect other | 214 |
| Contribution of acquisitions in Q1 2017 | - |
| Turnover in Q1 2017 | 108,154 |
Europe 3
| (x € 1,000) | Q1 2017 | Q1 2016 | Total growth | Total growth CER |
Org. growth | Org. growth CER |
|---|---|---|---|---|---|---|
| Turnover | 63,023 | 61,023 | 3.3% | 3.0% | 3.3% | 3.0% |
Turnover in the Europe segment increased by 3.3% (+3.0% at constant exchange rates), from € 61.0 million in the first quarter of 2016 to € 63.0 million in the first quarter of 2017. Almost all countries in Europe contributed positively to the growth in turnover in the first quarter of 2017.
3 The Europe segment comprises the Fagron activities in Europe, South Africa and Australia.
| South America4 | ||||||
|---|---|---|---|---|---|---|
| (x € 1,000) | Q1 2017 | Q1 2016 | Total growth | Total growth CER |
Org. growth | Org. growth CER |
| Turnover | 25,136 | 19,529 | 28.7% | 0.4% | 28.7% | 0.4% |
Turnover in the South America segment increased by 28.7% (+0.4% at constant exchange rates) to € 25.1 million in the first quarter of 2017. Fagron Brazil purchases most of its products in US dollars. The substantial strengthening of the Brazilian real relative to the US dollar (+19.5%) has enabled Fagron to purchase its products cheaper. As is customary, this positive currency effect has been fully passed on to Fagron customers by means of lower sales prices in Brazilian real. There is a direct correlation between the strengthening in percentage of the Brazilian real relative to the US dollar and the growth of Fagron Brazil in US dollar. The decrease in sales prices in Brazilian real and the unfavourable effect of this on turnover growth at constant exchange rates was offset by a significant growth in volume, enabling Fagron Brazil to further strengthen its position as market leader in Brazil.
| (x € 1,000) | Q1 2017 | Q1 2016 | Total growth | Total growth CER |
Org. growth | Org. growth CER |
|---|---|---|---|---|---|---|
| Turnover | 19,995 | 20,026 | -0.2% | -3.6% | -0.2% | -3.6% |
Turnover in the North America segment decreased by 0.2% (-3.6% at constant exchange rates) to € 20.0 million in the first quarter of 2017. Fagron's sterile compounding activities in the United States achieved strong, double-digit growth in turnover in the first quarter of 2017. The new 503B compounding facility in Wichita (Kansas) has been operational since the end of March. The new facility is currently licensed in 43 states. Sales of pharmaceutical raw materials and compounding concepts in North America continues to decrease relative to the same period of last year, but has stabilized in the first quarter of 2017 in comparison to the last quarter of 2016.
| (x € 1,000) | Q1 2017 | Q1 2016 | Total growth | Total growth CER |
Org. growth | Org. growth CER |
|---|---|---|---|---|---|---|
| Turnover | 1,723 | 1,978 | -12.9% | -15.0% | -12.9% | -15.0% |
Turnover of HL Technology, the segment that focuses on the development, production and introduction of innovative precision components and orthopaedic tools for the dental and medical industry, decreased by 12.9% (-15.0% at constant exchange rates) to € 1.7 million in the first quarter of 2017. The results of the strategic analysis with regards to HL Technology will be announced in the second quarter of 2017.
Hans Stols (CEO) and Karin de Jong (CFO) will provide further details on the trading update of the first quarter of 2017 in a conference call today. The conference call begins at 9:30 CET. From 5 to 10 minutes in advance, participants will be able to call in using the numbers and confirmation code below:
The Netherlands: +31 (0)20 721 92 51 Belgium/Europe: +32 (0)2 404 06 59
4 The South America segment comprises Fagron activities in Brazil (around 98% of turnover) and Columbia (around 2% of turnover). 5 The North America segment comprises Fagron activities in the United States.
United States: +1 719 457 1036 United Kingdom: +44 (0)330 336 9105 Confirmation code: 1885885
The presentation is available from 9:00 CET on http://investors.fagron.com. As from Friday 14 April 2017, the conference call can be listened to on Fagron's corporate website (http://investors.fagron.com).
8 May Annual and extraordinary general meeting of shareholders (link to convocation and agenda) 4 August Half-year results 2017 12 October Trading update, third quarter 2017
In case of inconsistencies, the Dutch press release prevails.
Constantijn van Rietschoten Chief Communications Officer Tel. +31 6 53 69 15 85 [email protected]
Fagron is a leading global company active in pharmaceutical compounding and focused on delivering tailored pharmaceutical care to hospitals, pharmacies, clinics and patients in 32 countries around the world.
The Belgian company Fagron NV is located in Nazareth and is listed on Euronext Brussels and Euronext Amsterdam under the ticker symbol 'FAGR'. The operational activities of Fagron are driven by the Dutch company Fagron BV. The head office of Fagron BV is located in Rotterdam.
Certain statements in this press release could be considered to be forward looking. Such forward-looking statements are based on current expectations and are influenced by various risks and uncertainties. Fagron consequently cannot provide any guarantees that such forward-looking statements will in fact materialise and cannot accept any obligation to update or revise any forward-looking statement as a result of new information, future events or for any other reason.
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