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Results for the first half of 2010

The Krka Management Board at a press conference on  29^th July 2010 presented the business results of the Krka Group and Company for the first half of 2010. Over the period the Group sold products and services worth EUR 500.0 million and generated a net profit of EUR 91.2 million, which is 17% more than for the same period last year. The Krka Company with sales worth EUR 477.5 million EUR recorded a profit of EUR 98.6 million, with growth of 19%.

Sales

Sales in the first half of the year totalled EUR 500.0 million, an increase of EUR 22.2 million or 5% on the same period last year. Sales on markets outside Slovenia contributed 90% of total sales.

Krka Company sales were worth EUR 477.5 million, which is EUR 58.8 million or 13% higher than last year's half year sales.

Krka Group sales by region 

Region Central Europe was Krka's leading sales region, with a 31% share of total Group sales. Product sales in the region in the first half of 2010 were worth EUR 155.6 million, growth of 14%. The second-ranking region by sales, which totalled EUR 119.7 million, was Region East Europe with a 24% share.

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Krka Group sales by product and service group

The Krka Group sold prescription pharmaceuticals worth EUR 420.5 million, achieving 4% sales growth compared to the same period last year. Self-medication product sales increased by 17% compared to the same period last year, reaching EUR 47.5 million. The lower purchasing power on individual markets led to sales of cosmetics falling by a bit more than a quarter, down to EUR 2.8 million. Animal health products sales were worth EUR 14.7 million, growth of 15%. Sales of health and tourism services were worth EUR 14.0 million, representing a fall of 14% on the same period last year.

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Business results

The Krka Group's operating profit of EUR 106.9 million represents a fall of 9% on the same period last year. The pre-tax profit was EUR 114.4 million, an increase of 11% on the same period last year, while the Group's net profit was EUR 91.2 million, which is 17% higher than the net profit for the first half of 2009. The Krka Company's net profit of EUR 98,6 million was 19% higher than the profit for the same period last year.

The Krka Group's net margin was 18.2% (Krka Company: 20.7%), the EBIT margin was 21.4% (Company: 23.5%), and the EBITDA margin 29.3% (Company: 29.8%). The Krka Group's ROE was 19.2% (Company: 20.5%), and the ROA was 13.1% (Company: 14.4%).

Research and development

In the first half of 2010 market authorisations were acquired for 10 new products in 22 forms. Over the same period 395 new market authorisations were acquired across a range of markets.

In the prescription pharmaceutical field market authorisations were acquired for 5 new products in 11 pharmaceutical forms and strengths. Authorisations were gained for two new products from the sartan range, an important pharmaceutical group used to treat cardiovascular disease. An EU decentralised procedure (DCP) was concluded for Candecor, with the active substance candesartan, in tablet form in four strengths, which acquired market authorisation for candesartan in 8 European states. A market authorisation for the entire European Union was acquired for the new product Tolura, with the active substance telmisartan (one of the modern sartans), in tablet form with 3 strengths. Authorisation was also acquired for a new form of the combined pharmaceutical, Co-Prenessa. The product contains a combination of the active substances perindopril and indapamide and is prepared using a new technological granulation process. Our selection of gastrointestinal pharmaceuticals from the proton pump inhibitor group was expanded with the conclusion of decentralised procedures for two new products: esomeprazole in the form of gastroresistant capsules in 2 strengths and pantoprazole in powder form for preparation as an injection solution, which is a new pharmaceutical form, offering a new method for administering the established active substance, pantoprazole.

Over the first half of the year in the self-medication range the market authorisation procedure was concluded for a new product, Septolete plus with strawberry flavour in pastille form and for Septolete Plus honey/lime pastilles in Bulgaria and the Czech Republic.

Market authorisations were gained for 4 new animal health products in 10 forms via a decentralised procedure. Development within cosmetic products was aimed on Fitoval products.

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Investments

The Krka Group allocated EUR 44.5 million to investment in the first half of 2010, with EUR 32.0 million invested by the controlling company, and EUR 12.5 million by subsidiaries. Some of the investment activities that were put on hold in 2009 due to the uncertain conditions were added to the 2010 plan. The largest current Krka investment is the construction of a plant at Krka's Ločna complex for production of solid pharmaceutical forms, with a capacity of 2.5 billion capsules, tablets or coated tablets per year.

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Employees

This year Krka has again primarily been recruiting in the fields of marketing and sales for its subsidiaries and representative offices abroad, and in research and development in Slovenia. The number of employees in the first half of the year increased by 159 in Slovenia, and by 211 in subsidiaries and representative offices abroad. At the end of June the Krka Group had 8345 employees, over 47% of them abroad. Furthermore, over half of all employees in the Krka Group have at least a university or higher professional degree.

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Investor information 

Over the first half of 2010 the largest increase in ownership share by group was for international investors. The ownership share of Slovenian individuals, Slovenian investment companies and funds, and other Slovenian companies fell slightly over the period. At the end of June 2010 Krka had 81,493 shareholders. In the first half of 2010 the Krka share price grew 2%, standing at EUR 65.51 at the end of June, while over the same period the main Slovenian index, the LJSE Composite, lost 13% in value.

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