STADA: 2011 preliminary results confirm operationally successful year – low net income due to high burdening one-time special effects – dividend to remain unchanged at EUR 0.37 per ordinary share – positive outlook until 2014
Today, on March 1, 2012, the Executive Board of STADA Arzneimittel AG, based on the preliminary results for financial year 2011, took a resolution on the dividend proposal for the past financial year. At the same time, the Executive Board adopted a positive outlook for financial year 2012 while emphasizing the growth targets according to the Group’s long-term prognosis for 2014.
Preliminary key figures for the Group for 2011
According to the preliminary results, Group sales are expected to have increased in 2011 – with continuing mixed development in individual national markets – by approx. 5% to approx. EUR 1,715.4 million.
Despite difficult framework conditions in individual national markets – particularly in Serbia and Germany – all operational key earnings figures, i.e. without consideration of the significant earnings-burdening one-time special effects, are expected to have increased in financial year 2011. In consideration of this increase of the adjusted key figures for the Group, financial year 2011, in the view of the Executive Board, can again be considered operationally successful for STADA. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) showed growth of an anticipated approx. 7% to approx. EUR 337.2 million and thus rose to the highest value in Company history. Adjusted net income is expected to have increased by approx. 10% to approx. EUR 146.6 million. The adjustments include one-time special effects as well as non-operational effects from interest rate hedge transactions.
Due, however, to the known high one-time special effects – particularly in the third quarter of 2011 as a result of impairments in connection with the difficult liquidity situation among Serbian wholesalers – reported net income in 2011 – like the other reported key earnings figures of the Group for the reporting year – will, as expected, decrease considerably and presumably reduce by approx. 68% to approx. EUR 22.0 million.
One-time special effects in financial year 2011 amounted to a total burden on earnings in the expected amount of approx. EUR 137.5 million before or approx. EUR 125.4 million after taxes. Non-operational effects from interest rate hedge transactions in 2011 are expected to total a relief on earnings in the amount of approx. EUR 1.2 million before or approx. EUR 0.9 million after taxes.
Taking these adjustments into account results in the following expected development of the reported and adjusted key earnings figures:
|In EUR million (approximate values)||2011||2010||+/- %|
|Operating profit, adjusted||257.6||239.3||+8%|
|Net income, adjusted||146.6||133.3||+10%|
|Earnings per share in EUR||0.37||1.16||-68%|
|Earnings per share in EUR, adjusted||2.49||2.27||+10%|
As of December 31, 2011, net debt is expected to amount to approx. EUR 900.3 million (December 31, 2010: EUR 864.1 million). The net debt to adjusted EBITDA ratio thus amounted to an expected 2.7 in 2011 (previous year: 2.7) and thereby below the maximum value of 3 envisaged by the Executive Board. Thus, this value remained the same – despite the burdening balance sheet date effect, where the completion of the partial acquisition of the branded product portfolio in Eastern Europe and the Middle East immediately prior to year-end on December 30, 2011 had already increased the debt as of the balance sheet date without this being able to first generate a contribution to EBITDA. Excluding this balance sheet date effect, the accordingly adjusted net debt to adjusted EBITDA ratio only amounted to 2.5.
The STADA Executive Board proposes to the Supervisory Board to recommend to the next Annual General Meeting on May 30, 2012 an unchanged dividend of EUR 0.37 per common share (previous year: EUR 0.37) for financial year 2011 despite the reduced net income reported due to the high burdening one-time special effects. The resulting total dividend payments of EUR 21.8 million (previous year: EUR 21.7 million) reflects a significantly higher distribution ratio as the previous year at approx. 99% of net income. In this dividend proposal, the Executive Board was guided by the estimation that the high extraordinary burdens on earnings in Serbia reported 2011 were of a one-time character, and that STADA’s sustainable earnings and dividend potential was not influenced by this.
The sales and earnings development of the STADA Group will continue to be characterized by partially stimulating, but also in part very challenging framework conditions in the various national markets in which STADA is active. In the overall assessment of opposing influence factors, the Executive Board, from today’s perspective, nevertheless expects a clear increase in Group sales for 2012, in particular with the inclusion of the current acquisitions, the purchase of the branded product package from Grünenthal for various national markets (see the Company’s ad hoc release of May 12, 2011 as well as the Company’s ad hoc updates of July 22, 2011, December 30, 2011, January 1, 2012, January 27, 2012, and January 31, 2012), as well as the purchase of Spirig Healthcare’s generics Swiss business (see the Company’s ad hoc release of May 19, 2011 as well as the Company’s ad hoc updates of November 9, 2011 and January 31, 2012). Here, according to the estimation of the Executive Board, the Branded Products segment is expected to grow at a disproportionate rate in 2012, so that the share of the generally higher margin branded products in Group sales will thus continue to grow.
In order to strengthen mid and long-term earnings potential, STADA will continue with the implementation of the Group-wide cost efficiency program “STADA – build the future” scheduled for the period of 2010 to 2013. Thereby the expected planned project-related costs (see the ad hoc release of June 7, 2010) will continue to be reported as one-time special effects according to the progress of the project in each case; this also includes the one-time burden resulting from the sale of the factory in Ireland in the first quarter of 2012 (see the Company’s ad hoc release of February 6, 2012).
Despite these earnings burdening one-time special effects from the further implementation of the “STADA – build the future” program, The Executive Board expects a significant increase in reported net income for 2012 as compared to 2011.
The STADA Executive Board also expects continued growth in the key earnings figures adjusted for one-time special effects in the Group for 2012 and also sees, from today’s perspective, the opportunity for an increase in the high single-digit percent area in EBITDA adjusted for one-time special effects for 2012. This means that record results are once again being targeted for these key figures in 2012.
In addition, the Executive Board affirms its long-term prognosis envisaged for 2014, according to which 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 (see the Company’s ad hoc release of June 7, 2010). The Group’s current acquisitions, which STADA finances organically, i.e. without a capital increase, give the Executive Board a high level of confidence that these long-term growth targets will, at a minimum, be reached despite the operating challenges that still remain in individual national markets.
STADA’s final business results for 2011 will be published on March 29, 2012.
For more information, please contact:
STADA Arzneimittel AG
D-61118 Bad Vilbel
Tel.: +49 6101 603-113
Fax: +49 6101 603-506