Krka published their FY 2019 estimated results yesterday showing a 12% YoY increase in sales, 18% YoY increase in EBIT and a net profit of EUR 242m (+39% YoY).
According to 2019 estimate results, the Krka Group recorded EUR 1.5bn in revenue, representing a 12% YoY increase. All sales regions and most markets recorded sales growth, while sales of all product groups and services advanced as well.
When breaking down revenue, East Europe remained the largest market, accounting for 32.3% of the Group’s total sales. The region recorded sales in the amount of 481.2m, which represents a 17% YoY increase. The largest increase in the region was posted by the Ukrainian market where sales soared 42% YoY. Meanwhile Russia, the region’s key market, posted a 13% YoY increase in sales.
Region Central Europe, comprising the Visegrad Group and the Baltic states, followed with sales amounting EUR 339.6m (+7% YoY). Note that this accounted for 22.8% of Krka’s total sales. Poland, the leading market, generated EUR 159.5m in sales and recorded a 7% YoY growth. Sales also went up in Hungary, Slovakia, Lithuania, Latvia, and Estonia.
Region West Europe made EUR 336.1m, a 22.6% share, and was the third largest Krka Group region in terms of sales value. The region posted a growth of 17% YoY. Germany, the Scandinavian countries, Spain, and Italy generated the strongest sales. Sales through subsidiaries were essential for sales growth and composed 76% of regional sales, while sales through unrelated parties retained the 2018 level. The Scandinavian countries, Benelux, Germany, Portugal, Italy, and the United Kingdom presented strongest growth.
Sales in Region South-East Europe amounted to EUR 191.3m, 9% more than in 2018, constituting a 12.8% share of the Krka Group’s total sales. Romania and Croatia were our two leading markets. However, the highest sales growth was recorded in Bulgaria and Serbia.
In Slovenia, sales added up to EUR 92.4 million, accounting for 6.2% of total Krka Group sales. The growth rate was 4%. Product sales accounted for EUR 52.9m, the major portion of sales total, while health resorts and tourist services yielded EUR 39.5m. Region Overseas Markets made EUR 48.6m by product sales, recording 12% growth and 3.3% share of total Krka Group sales.
The improved top line performance also boosted Krka’s EBIT, which amounted to EUR 274m (+18% YoY). Finally, net profit went up 39% YoY and amounted to EUR 242.1m.
Krka’s Selected Financials (EUR 000)
Bribery Accusations
In their statement the company also addressed the recent allegations regarding bribery in Romania. As a reminder, mid-January the Romanian media released an article claiming that they had obtained information that Krka’s employees in Romania acted unlawfully and marketed medications by bribing healthcare professionals. In the aftermath Krka conducted an internal investigation which found no basis for such allegations and now the company denies justification of any allegations.
2020 Outlook
The Management also released their outlook for 2020, according to which the Krka Group’s sales are projected at EUR 1.52b, while net profit is projected at just over EUR 210m. Meanwhile, Krka intends to allocate EUR 134m for investment projects to increase and modernise production capacities and infrastructure. The total number of employees is expected to rise 3% in 2020 and is projected to exceed 12,300.
We will publish more details about Krka’s FY 2019 estimate results in our blog after listening to the preliminary results conference call, which will be held today at 10:00 CET.
