EASTPHARMA LTD.
London, 14 August 2014 - a company active in the manufacturing and marketing of pharmaceutical products in Turkey and in other regional markets, informs that it will be announcing financial statements for the period 30 June 2014 and a review of its main subsidiary DEVA Holding's financial statements for the related period.
Management comment on the financial 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 15 August 2014.
A conference call to review the financial performance for the period 30 June 2014 will be hosted by the management of EastPharma at 4:00pm London time on 15 August 2014(11:00am New York / 5:00pm Zurich time / 6:00pm Istanbul time). The dial-in details are provided belowConference call:
Conference call:
Participant Std International Dial-In:
United Kingdom: +44 (0) 14 5255 5566
United States: +1 631 510 7498
Participant Local Dial-In:
Switzerland, Baden: 0565800007
Germany, Frankfurt: 06922224918
Conference ID: 84137586
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 H1 2014 MARKET PERFORMANCE
H1 2014 MARKET PERFORMANCE
According to IMS Health data, a total of 923.15mn units of drugs, worth TRY 8.27bn, were sold in the Turkish Pharmaceutical market in H1 2014 (H1 2013; 889.12mn units of drugs, worth TRY 7.65bn).
EastPharma maintained its 5.5% market share in unit terms and the company maintained its 4th place ranking in the Turkish pharmaceutical market. Eastpharma's unit sales increased by 3.56% compared to the same period of 2013, reached to 51.01mn units sold according to IMS figures.
EastPharma's market share by value decreased to 3.9% in H1 2014 from 4.1% in H1 2013 in the Turkish pharmaceutical market and the company maintained its 5th place in the national ranking. Eastpharma achieved sales worth TRY 323.72mn, an increase of 3.70% compared the same period of 2013.
MANAGEMENT COMMENTS ON EASTPHARMA's SALES PERFORMANCE IN H1 2014 (IFRS):
According to IFRS results, revenue in H1 2014 was USD 105.9mn, down 13.1% from the same period in 2013 (USD 121.9mn). In Turkish Lira terms, revenue increased by 3.9% in the same period (Net sales in H1 2014 were TRY 229.1mn vs TRY 220.5mn net sales in H1 2013).
The average US dollar exchange rate strengthened by 19.6% against the Turkish Lira to 2.1629 in H1 2014, which compares with an average rate of 1.8089 in H1 2013. The USD/TRY exchange rate was 2.1343 on 31 December 2013, while it was 2.1234 on 30 June 2014, which corresponds to a decrease of 0.5%.
EastPharma's sales decrease was mainly due to the strengthening of the USD against the Turkish Lira. In H1 2014 versus H1 2013, Human Pharma revenues in US dollar terms decreased by 17.1% (from USD 115.8mn to USD 96mn). Deva's Capital Markets Board (CMB) results show revenue in H1 2014 was TRY 232.5mn, up 4.0% from the same period in 2013 (TRY 223.5mn).
Deva's sales increase was mainly due to increased volumes in Deva's Veterinary business revenue. In H1 2014 versus H1 2013, Human Pharma revenue decreased by 0.7% (from TRY 212.5mn to TRY 211.1mn).Veterinary business revenue increased by 121% compared to the H1 2013 (from TRY 7.5mn to TRY 16.6mn).
EastPharma's gross profit in H1 2014 was USD 40.6mn, down from USD 52.4mn in H1 2013. The gross profit margin in H1 2014 was 38% vs 43% in H1 2013.
EBITDA in H1 2014 was USD 16.6mn vs USD 24.7mn in H1 2013 representing an EBITDA margin of 15.6% vs 20.3% in H1 2013.
Operating expenses in H1 2014 decreased by 17.4%, from USD 37.6mn to USD 31.1mn. The ratio of operating expenses to revenues decreased to 29.4% from 30.9% compared to H1 2013. Sales and marketing expenses in H1 2014 were 18.5% of revenues; general administrative expenses were 10.3% of revenues. These expenses were 20.3% and 10.3% in H1 2013, respectively.
Finance cost decreased by USD 0.3mn, from USD 21.7mn to USD 21.4mn in H1 2014 compared to H1 2013. Foreign exchange gain/losses on borrowings decreased by USD 2.1mn, amortization of discount on receivables decreased by USD 1.3mn, on the other hand, interest on borrowings and bond interests and expenses increased by USD 3.2mn.
Receivable days at 30 June 2014 were 123 days, compared to 134 days as at 31 December 2013.
Philipp Haas, EastPharma's Chairman and CEO, said;
"The company continues to be adversely affected by a very difficult operating environment with a continued low value of the domestic currency and high interest rates. The Turkish Lira devaluation is causing our gross profit margin to shrink, given that most of our raw material purchases are denominated in hard currencies, while the elevated level of interest rates keeps our finance costs at a very high level. At the same time, according to the theoretically still valid reference price system, the industry should receive a significant price increase, however, until now; the industry has not even received a small adjustment. As generic competition increases and negative pricing pressures from outside continue, further price pressure is hitting already depressed prices, impacting our gross profit margin negatively.
On the other hand, the underlying operating performance of the company is satisfactory. We successfully introduced the first of a whole range of ophthalmology products as a result of our R&D efforts and many more product introductions have enabled us to defend a relatively high market share in terms of units. While we are uncertain as to when the difficult environment will improve, we are applying strict cost controls in all areas of the organization."