In H1, Krka noted an increase in sales of 0.6%, decrease in EBITDA of 6.7% and an increase in net profit of 10.7%.
Krka published their preliminary H1 results, indicating a very solid Q2 result which compensated for a weaker Q1. To be specific, in H1, revenues grew by 0.6% to EUR 808.6m, reaching 52.3% of the company’s FY 2021 target. This should be considered as a very strong result given the very high base effect of H1 2020 when the company witnessed a stockpiling effect in the beginning of the pandemic. A closer look at the Q2 shows as a double-digit top line growth in virtually all of Krka’s markets.
When looking at H1, East Europe noted a sales increase of 2% YoY to EUR 276.5m, Central Europe noted a 3% increase, while West Europe noted a 12% YoY decrease. The largest relative increase was noted on Krka’s Overseas market of 14%. Looking at Russia, the largest individual market, sales were affected by the depreciation of the Russian rouble of 15% so EUR sales stood at 168.2m (down 7% YoY). Excluding the FX effects, Russian market actually showed a very solid 10% YoY increase.
In terms of the segmentation by product group, human heath noted a slight decrease of 1% YoY (to EUR 748.2m) which came on the back of lower non-prescription products sales. Meanwhile, prescription pharmaceuticals remained relatively flat. The company also added that Krka obtained marketing authorizations for six new products in H1, of that five prescription pharmaceuticals and one animal health product.
Going further down the P&L, EBITDA reached EUR 254.7m, showing a 6.7% decrease YoY. Such a result implies EBITDA margin of 31.5%, representing a decrease of 2.5 p.p. YoY. However, note that this is still significantly above the strategic level of 24%, meaning that Krka is likely still benefiting from some COVID-19 related positive impacts. Namely, lower marketing expenses since marketing activities are yet to return to their pre COVID-19 levels. Operating profit reached EUR 200.1m (-7.7% YoY), indicating a EBIT margin of 24.7% (-2.3 p.p. YoY).
At the same time, net profit noted a solid increase of 10.6% to EUR 177.4m. Such a result could arguably be attributed to a relatively better FX results in H1 2021 (mainly Russian rouble). We also note that such a result is at 67% of the company’s FY 2021 plan.
In terms of CAPEX, Krka intends to allocate EUR 114m to investment projects, primarily to increase and upgrade production facilities and the infrastructure, and approximately 10% of revenue to research and development.
