STADA Arzneimittel AG — Earnings Release 2011

May 12, 2011

News Details

Corporate | 12 May 2011 07:25

STADA: Positive business development in Q1/2011 – Increase of Group sales and all key earnings figures – Outlook remains positive for 2011/2012

STADA Arzneimittel AG / Key word(s): Quarter Results

12.05.2011 / 07:25

Corporate news

STADA: Positive business development in Q1/2011 – Increase of Group sales and all key earnings figures – Outlook remains positive for 2011/2012

Important items at a glance

– Positive development as expected in Q1/2011:

– Group sales rise to EUR 418.3 million (+6%)

– EBITDA increases to EUR 79.8 million (+5%) and adjusted to EUR 82.5 million (+9%)

– Net income goes up to EUR 29.8 million (+6%)

– Earnings per share grows to EUR 0.51 (+6%)

– Free cash flow improves to EUR 31.2 million (+27%)

– Further expansion of international business activities

– Outlook remains positive for 2011 and 2012

Bad Vilbel, May 12, 2011 – Today, on May 12, 2011, STADA Arzneimittel AG published the financial results for the first quarter of 2011. Accordingly, both Group sales and all other key earnings figures were increased.

‘In the first quarter of 2011, we further grew in terms of sales and earnings and thereby again achieved a good result – in particular if one compares it with the good level in the corresponding quarter of the previous year. In addition, it is pleasing that we were able to further expand our international business activities very clearly with sales growth of 15%. STADA thus generates approximately 70% of its sales in international markets now’, said Hartmut Retzlaff, STADA’s Chairman of the Executive Board, satisfied with the Group’s development in the first three months of the current financial year.

Development of sales

In the first quarter of 2011, Group sales rose by 6% to EUR 418.3 million (1-3/2010: EUR 395.7 million). This was due in particular to the Group’s international sales which, in the reporting period, made up a total of 70% (1-3/2010: 64%) of Group sales and increased by 15% to EUR 291.0 million (1-3/2010: EUR 252.3 million). When effects on sales attributable to changes in the Group portfolio as well as currency effects are taken into account, Group sales increased by 4% in the first three months of 2011 compared to the corresponding period in the previous year.

Sales of Generics , which continues to be the clearly larger core segment, rose by 5% in the reporting period to EUR 292.8 million (1-3/2010: EUR 278.4 million), thus contributing 70.0% to Group sales (1-3/2010: 70.4%). Adjusted, Generics sales in the Group increased by 5%.

Branded Products recorded sales growth of 13% to EUR 114.6 million in the reporting period (1-3/2010: EUR 101.2 million) and thus had a share of 27.4% in Group sales

(1-3/2010: 25.6%). Adjusted sales of branded products in the Group showed growth of 10%.

STADA business activities continued to focus clearly on Europe in the first three months of 2011, where 96% of sales were generated. Here, sales of the STADA Group went up by 6% to EUR 401.8 million (1-3/2010: EUR 378.2 million). In Western Europe , STADA posted an increase in sales in the first three months of 2011 of 4% to EUR 301.8 million

(1-3/2010: EUR 291.4 million), while in Eastern Europe , the Group recorded a sales plus of 15% to EUR 100.0 million (1-3/2010: EUR 86.8 million) in the reporting quarter.

Earnings development

In the first three months of 2011, it was possible to increase all reported key earnings figures in the STADA Group.

In the first quarter of 2011, operating profit rose by 12% to EUR 57.6 million (1-3/2010: EUR 51.4 million). EBITDA recorded growth of 5% to EUR 79.8 million (1-3/2010: EUR 75.8 million) in the reporting quarter. Net income increased in the same period by 6% to EUR 29.8 million (1-3/2010: EUR 28.1 million).

After adjusting the key earnings figures for influences distorting the period comparison resulting from one-time special effects and non­operational effects from interest rate hedge transactions (first quarter of 2010: adjusted for one-time special effects as well as non­operational effects from currency influences and interest rate hedge transactions), adjusted operating profit increased in the first three months of 2011 by 12% to EUR 63.6 million (1-3/2010: EUR 57.0 million). Adjusted EBITDA showed an increase of 9% to EUR 82.5 million in the first quarter of 2011 (1-3/2010: EUR 76.0 million). Adjusted net income at EUR 33.2 million was slightly above the level of the previous year (1-3/2010: EUR 33.1 million) in the reporting quarter.

One-time special effects in the first three months of 2011 amounted to a net burden on earnings in the amount of EUR 5.9 million before or EUR 4.5 million after taxes (1-3/2010: net burden on earnings due to one-time special effects in the amount of EUR 7.9 million before or EUR 6.0 million after taxes). Non-operational effects from interest rate hedge transactions amounted, in the reporting period, to a net relief on earnings of EUR 1.5 million before or EUR 1.1 million after taxes, which resulted from the measurement of these transactions (1-3/2010: net relief on earnings as a result of non-operational effects from currency influences and interest rate hedge transactions of EUR 1.4 million before or EUR 1.0 million after taxes).

Taking into account the adjustments resulted in the following development of the reported and adjusted key earnings figures in the first quarter of 2011 as compared to the corresponding quarter of the previous year:

in EUR million	1-3/2011	1-3/2010	+/- %
Operating profit	57.6	51.4	+12%
Operating profit, adjusted	63.6	57.0	+12%
EBITDA	79.8	75.8	+5%
EBITDA, adjusted	82.5	76.0	+9%
EBIT (earnings before interest and taxes)	57.6	51.3	+12%
EBIT, adjusted	63.5	56.8	+12%
EBT (earnings before taxes)	45.5	38.4	+18%
EBT, adjusted	49.9	44.9	+11%
Net income	29.8	28.1	+6%
Net income, adjusted	33.2	33.1	0%
Earnings per share in EUR	0.51	0.48	+6%
Earnings per share in EUR, adjusted	0.56	0.56	0%

Balance sheet and cash flow

As of March 31, 2011, the Group’s equity-to-assets ratio , at 36.2% (December 31, 2010: 34.6%), continued to be clearly above the minimum ratio targeted by the Executive Board. Net debt further decreased to EUR 835.2 million as of March 31, 2011 (December 31, 2010: EUR 864.1 million).

Free cash flow increased to EUR 31.2 million in the reporting period (1-3/2010: EUR 24.6 million).

‘In the first quarter of 2011, we were able to further improve two key figures for operational management which are significant to us. Thus, on the one hand, our free cash flow increased by a pleasing 27%. And on the other hand, we reduced the net debt to adjusted EBITDA ratio to a new record value of 2.5’, was the positive comment of Hartmut Kraft, STADA’s Chief Financial Officer.

Regional development in STADA’s two largest national markets

In the first quarter of 2011, STADA’s two largest national markets continued to be Germany and Russia.

In Germany , which continues to be the largest national market for STADA, sales decreased as expected in the first quarter of 2011 by 11% to EUR 127.3 million (1-3/2010: EUR 143.4 million). The share of the German business activities in Group sales thus amounted to 30.4% in the first three months of 2011 (1-3/2010: 36.2%). The decrease in sales in Germany was attributable to the ongoing difficult local framework conditions for generics. Sales in the German Generics segment in the reporting quarter thus decreased by 13% to EUR 92.5 million (1-3/2010: EUR 106.1 million).

In the first quarter of 2011, sales of branded products went down by 5% to EUR 34.5 million (1-3/2010: EUR 36.4 million). The total share achieved by STADA with branded products in the German market was 27% in the first three months of 2011 (1-3/2010: 25%).

For financial year 2011, the Executive Board calculates, with a sales strategy that continues to be geared toward an appropriate local operating profitability, further sales decreases in the generics area – despite discount agreements won in the context of the sixth round of AOK tenders – and thus for the German business overall.

In Russia , which continues to be the Group’s second most important national market, STADA generated significant sales growth in the first quarter of 2011 in the amount of 20%, applying last year’s exchange rates. In euro, sales even increased by 22% to EUR 54.5 million (1-3/2010: EUR 44.7 million).

The two core segments in the Russian market had nearly the same share of local Group sales in the first three months of 2011. With generics, the Group achieved a sales increase by 6% to EUR 23.7 million (1-3/2010: EUR 22.4 million) or 44% of STADA’s sales in Russia (1-3/2010: 50%). Sales of branded products rose by 37% to EUR 30.4 million (1-3/2010: EUR 22.2 million) or 56% of STADA’s sales in the Russian market (1-3/2010: 50%).

In financial year 2011, STADA expects further strong sales growth in local currency in Russia with operating profitability above Group average. The sales and earnings contributions of STADA’s business in both the Russian market as well as at Group level will remain largely affected by the development of the currency relation of the Russian ruble to the euro.

Product development

Research and development costs , which exclusively comprise costs for product development at STADA in view of its business model focused on off-patent active pharmaceutical ingredients, amounted to EUR 11.8 million in the first three months of 2011 (1-3/2010: EUR 12.0 million). In addition, development costs for new products in the amount of EUR 2.6 million were capitalized in the reporting quarter (1-3/2010: EUR 3.9 million).

Overall, the Group launched 147 individual products worldwide in the first quarter of 2011 (1-3/2010: 158 product launches) in individual national markets.

‘In view of our product pipeline, which remains well-filled, we expect to be able to launch numerous products in the market again also in the further course of financial year 2011’, commented Dr. Axel Müller, STADA Chief Production and Development Officer, on the promising prospects of the STADA development activities.

Outlook

The Executive Board fundamentally confirms the positive outlook for the future development of the STADA Group already given at the beginning of the year. STADA’s sales and earnings development will thereby continue to be characterized in financial year 2011 and 2012 by differing and partially contradictory factors in the various national markets. The overall sales increase for the Group expected by the Executive Board, however, should positively influence earnings development.

Positive effects on earnings as a result of the implementation of the ‘STADA – build the future’ project are also to be expected for EBITDA adjusted for one-time special effects and the correspondingly adjusted net income to a significant extent from the current financial year 2011 and mainly in 2012. By 2013, from today’s perspective, project-related investments of a total of approx. EUR 20 million as well as project-related expenditure for special write-offs, personnel expenses and consultancy services of a total of approx. EUR 50 million are expected (each including the past financial year 2010). The Group will recognize each of these project-related costs as a one-time special effect according to progression of the project.

Overall, STADA is well positioned for its successful development to continue. For financial years 2011 and 2012, the Group expects further growth in Group sales and earnings. In its overall assessment, the Executive Board, from today’s perspective, thereby sees the opportunity for an increase in adjusted EBITDA in the high single-digit percentage range in financial year 2011. This would mean that adjusted EBITDA in 2011 would reach again a record value in STADA’s Company history.

In addition, the Executive Board continues to hold to the long-term targets envisaged for financial year 2014, according to which with Group sales of approx. EUR 2.15 billion, at an adjusted level, EBITDA of approx. EUR 430 million and net income of approx. EUR 215 million should be reached.

Additional information:

STADA Arzneimittel AG / Corporate Communications / Stadastraße 2-18 / D – 61118 Bad Vilbel /

Phone: +49 (0) 6101 603-113 / Fax: +49 (0) 6101 603-506 / E-mail: communications@stada.de

Or visit us in the Internet at www.stada.com .

End of Corporate News

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Language:	English
Company:	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,
Listed:	Regulierter Markt in Düsseldorf, Frankfurt (Prime Standard); Freiverkehr in Berlin, Hamburg, Hannover, München, Stuttgart

End of News	DGAP News-Service

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124041  12.05.2011