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Richter GroupQ1 2014
Richter Group
Interim Report, Q1 2014 7 May 2014
Summary – Q1 2014Q1 2014
Summary Q1 2014
Consolidated sales: -1.0% (EUR), +3.1% (HUF)− significant sales decline in Russia and Ukrainesignificant sales decline in Russia and Ukraine− currency devaluation in the region+ good growth in EU15 countries and in other CIS region
Profit for the period*: -52.9% (EUR), -51.0% (HUF)p ( ), ( )− negative balance of Other income and expenses − net financial income - unrealised financial items – significant loss− weakening RUB exchange rateweakening RUB exchange rate
22
*Net income attributable to owners of the parent
Consolidated financial highlightsQ1 2014
Consolidated financial highlights
HUF Change EUR Changeg g
Total revenues 88.5bn 3.1% 287.1m -1.0%
P fit fProfit from operations 10.3bn -32.5% 33.3m -35.2%
Profit for the period* 9 3bn -51 0% 30 3m -52 9%Profit for the period 9.3bn -51.0% 30.3m -52.9%
EPS (diluted) 50 -51.0% 0.16 -52.9%
*Net income attributable to owners of the parent
3
Geographical composition of Group salesQ1 2014
Geographical composition of Group sales
Hungary Hungary
Russia Poland
RussiaPoland
11%
7%28%
11%
6%22%
Q1 2013 Q1 2014Romania RomaniaUkraine12%
6%
13%5%
EU10
Other CIS
Ukraine
R W
EU10Other CIS
RoW8 %
6%
10%
7%
2%3%2%3%
Latin America
3 %
9%
13%
8%
4% 4%2%
EU15USA
RoW China EU15USALatin America
T t l T t l
China
2%
*Including Croatia
Total: HUF 85.8bnEUR 289.9m
Total: HUF 88.5bnEUR 287.1m
+ 3.1% (HUF) - 1.0% (EUR)
44
Including Croatia
**Including Hong-Kong
***Restated in respect to exclude Latin Ameirca.
P&LQ1 2014
P&L
HUFmQ1 2014
Change %
EURmQ1 2014
Change %
as % of total revenues
Total revenues 88,527 3.1 287.1 -1.0
Gross profit 55,526 1.1 180.1 -2.9 62.7
S&M expenses (27,209) 1.7 (88.2) -2.4 30.7
A&G expenses (4,752) -5.9 (15.4) -9.9 5.4
R&D expenses (11,741) 6.8 (38.1) 2.7 13.2
Other income and other expenses (1,560) n.a. (5.1) n.a. 1.8
Profit from operations 10,264 -32.5 33.3 -35.2 11.6
Net financial income (1,150) n.a. (3.7) n.a. 1.3
Profit for the period* 9,342 -51.0 30.3 -52.9 10.6
*Profit attributable to owners of the parent
5
Increasing gross profit, decreasing gross marginQ1 2014
Increasing gross profit, decreasing gross margin
250 000
- Significant sales decline in Russia and UkraineWeakening RUB/EUR
HUFm 62.7%64.0%
40%
50%
60%
150 000
200 000
- Weakening RUB/EUR exchange rate
- Increasing proportion of
10%
20%
30%
50 000
100 000wholesale and retail segment
+ Devaluation of HUF exchange0%0
2007 2008 2009 2010 2011 2012 2013 13Q1 14Q1
Gross profit Gross margin
Devaluation of HUF exchange rate compared to EUR
+ Increase of turnover in EU15 countries and in other CIScountries and in other CIS region
6
Decreasing operating marginQ1 2014
Decreasing operating margin
25%70000
HUFm
Decreasing gross margin
Lack of milestone incomes
15%
20%
40000
50000
60000
11.6%
17.7%
Negative balance of Other income and expenses incurred
5%
10%
10000
20000
30000
p− claw back related liabilities
Increasing R&D expenditure0%0
2007 2008 2009 2010 2011 2012 2013 13Q1 14Q1
Profit from operation Operating margin
g p
7
Pharmaceutical sales*Q1 2014
Pharmaceutical sales
Key drivers of growth:
EU15 countries and other CIS
Female healthcare
Successful product launches
*87% of turnover originates from outside of Hungary
8
g g y
8
HungaryQ1 2014
Hungary
Turnover *
Stabilising pharmaceutical market
HUFbn
30
40
Turnover *
Sales increase: 6.9% in HUF
HUFbn
10
20Successful product launches
0
10
2008 2009 2010 2011 2012 2013 13Q1 14Q1
*Turnover of the pharmaceutical segment
9
EU – composition of sales*Q1 2014
EU composition of sales
Traditional EU member states
44%
− strengthening our position in key Western-European markets
− own gynaecological sales and marketing network
56%
Poland, Romania, EU10**
− well established in the region for decades
− own specialized sales network*Turnover of the pharmaceutical segment p** Including Croatia
10
EU15Q1 2014
EU15
Turnover*
26.3% sales increase in EUR EURm
100
120
140
Turnover*
Recently established S&M network
EURm
40
60
80
100
Female healthcare products: Richter OC portfolio, acquired
0
20
2008 2009 2010 2011 2012 2013 13Q1 14Q1
p , qOCs, Esmya®
*Turnover of the pharmaceutical segment
11
Poland, Romania, EU10Q1 2014
Poland, Romania, EU10
Increasing generic competition
Turnover*
Increasing generic competition
Price erosionEUR
150
200
Turnover*
Poland: – 14.4% decrease in PLN
EURm
50
100– Lack of flu epidemic –Groprinosin sales decrease
02008 2009 2010 2011 2012 2013 13Q1 14Q1
Poland Romania EU10**
Romania:– increasing sales levels
(+3 9% in RON)(+3.9% in RON)– significant delays in payment
*Turnover of the pharmaceutical segment**Data of 2012 adjusted with Croatia
12
CISQ1 2014
CIS
Turnover*
Sales decrease (-16.6% in EUR) EURm
400
500
Turnover*( )
Ukraine
EURm
100
200
300− Political uncertainty− UAH devaluation
02008 2009 2010 2011 2012 2013 13Q1 14Q1
Russia Ukraine Other CIS
Russia− RUB devaluation− Slow down of Russian economy
*Turnover of the pharmaceutical segment
13
RussiaQ1 2014
Russia
Sales decrease
Turnover*
Sales decrease(-5.6% in RUB; -21.7% in EUR)
Significant weakening of EURm
300
400
Turnover*Significant weakening of RUB/EUR exchange rate inQ1 2014 – 16.4%
EURm
100
200Destocking at the wholesalers
0
100
2008 2009 2010 2011 2012 2013 13Q1 14Q1
Increase of manufacturing and warehousing capacities
*Turnover of the pharmaceutical segment
14
Ukraine, Other republicsQ1 2014
Ukraine, Other republics
Turnover*
Ukraine− 20.7% decrease (USD)
USD
150
200
Turnover*− political and economic
turmoil− UAH devaluation
USDm
50
100
Other republics− 23 0% increase (USD)
02008 2009 2010 2011 2012 2013 13Q1 14Q1
Ukraine Other CIS
23.0% increase (USD)
*Turnover of the pharmaceutical segment
15
USAQ1 2014
USA
Turnover*
Sales increase (USD 3.4m)
USDm
160
200
Turnover*
Significant proportion of gynaecology – 79%
USDm
80
120
Sales increase – Plan B
0
40
2008 2009 2010 2011 2012 2013 13Q1 14Q1
*Turnover of the pharmaceutical segment
16
ChinaQ1 2014
China
Dynamically expanding pharmaceutical market
From 2013 JV operates with Richter majority stake
Sales network: 225 medical representatives
Sales in Q1 2014*: EUR 10 2mSales in Q1 2014*: EUR 10.2m
*Including Hong-Kong
17
Latin AmericaQ1 2014
Latin America
Regional expansion:− BrazilBrazil− Mexico
Female healthcare products in focus
Sales in Q1 2014: EUR 6 4mSales in Q1 2014: EUR 6.4m
18
Pharmaceutical sales by therapeutic areasQ1 2014
Pharmaceutical sales by therapeutic areas
12%
OtherCentral nervous system
12%
24%6%
19%Muscle relaxants
Q1 24%4%Gastrointestinal CardiovascularQ1
2014
35%
Gynaecology
Total: EUR 245.9m
19
Female healthcare sales by regionQ1 2014
Female healthcare sales by region
1206% CEE
Hungary
CIS
EURm
60
80
10026%6%
13%CIS
0
20
40
31%
5%10%
4%5%
EU15
Ex-Grünenthalportfolio
China
Latin America
Gynaecological sales Non‐gynaecological sales
USA
RoW
Total: HUF 26.9bnEUR 87.1m
2020
Female Healthcare: Esmya® - gradual launches IQ1 2014
Female Healthcare: Esmya gradual launches I.
Reimbursement grantedReimbursement granted
Country Launch Reimbursed Country Launch ReimbursedGermany Q1 12 Q1 12
United Kingdom Q2 12 Q2 12
Austria Q2 12 Q4 12
Czech Republic Q2 12 Q3 13
Belgium Q3 13 Q3 13
France Q3 13 Q3 13
Denmark Q4 12 Q4 12
Norway Q4 12 Q4 12
Hungary Q2 12 Q1 13
Spain Q4 13 Q3 13
Canada Q3 13 Q3 13
Finland Q4 13 Q4 13Hungary Q2 12 Q1 13
Sweden Q1 13 Q1 13
Slovakia Q3 12 Q1 13
Finland Q4 13 Q4 13
Luxemburg Q3 13 Q4 13
Switzerland Q4 13 Q4 13
Slovenia Q4 12 Q2 13
Netherland Q3 12 Q2 13
Ireland Q1 14 Q1 14
Bulgaria Q4 12 Q1 14
21
Female Healthcare: Esmya® - gradual launches IIQ1 2014
Launch without reimbursement
Female Healthcare: Esmya gradual launches II.
Country LaunchPoland Q2 12
Country LaunchTurkmenistan Q4 13
Baltic States Q3 12
Romania Q3 12
Portugal Q3 12
Ukraine Q4 13
Croatia Q1 14
Armenia Q1 14Portugal Q3 12
Russia Q2 13
Belorussia Q4 13
Armenia Q1 14
Uzbekistan Q1 14
Serbia Q1 14
Georgia Q4 13
Kazahstan Q4 13
Tajikistan Q1 14
Moldova Q1 14
22
Sales networkQ1 2014
Sales network
1800
staff
1200
1400
1600
800
1000
1200
200
400
600
02006 2007 2008 2009 2010 2011 2012 2013 13Q1 14Q1
CIS CEE Hungary EU15 China
23
Wholesale and retailQ1 2014
Wholesale and retail
W&R sales contributions is 17% of total sales
72% of the W&R turnover originates in Romania
2424
Ownership structureQ1 2014
Ownership structure
31 March 2014
Domestic investors
7.16%International
investors67.59%
Hungarian State Holding Company
25.25%
2525
Q1 2014
Thank you for your attention!y y
26
AppendixQ1 2014
Appendix
Exchange rates
27
Evolution of currency exchange ratesQ1 2014
Evolution of currency exchange rates
320
340
HUF
280
300
240
260EUR/HUF
USD/HUF
200
220
180
28
Evolution of currency exchange ratesQ1 2014
Evolution of currency exchange rates
EUR
50
52
EUR
46
48
44 RUB/EUR
40
42
38
29
Exchange ratesQ1 2014
Exchange rates
At i d dAt period end31.03.2014 31.12.2013 30.09.2013 30.06.2013 31.03.2013
EUR/HUF 307.06 296.91 298.48 295.16 304.30
USD/HUF 223.38 215.67 221.06 226.18 237.36
RUB/HUF 6 27 6 55 6 80 6 91 7 65
Average
RUB/HUF 6.27 6.55 6.80 6.91 7.65
Q1 2014 M12 2013 M9 2013 H1 2013 Q1 2013
EUR/HUF 308.4 296.8 296.5 295.9 296.1
USD/HUF 225.0 223.4 225.1 225.1 224.0
RUB/HUF 6.4 7.0 7.1 7.3 7.4
30