According to Krka’s estimate, sales revenue is up 6% YoY, (unadjusted) estimated EBITDA is down 25%, while the estimated net profit is up 33% YoY, at EUR 236.2m.
Krka published an estimate of the Q2 2022 results of the Company after its GSM meeting. According to the estimate, sales revenue amounted to EUR 853.4m, representing an increase of 6% YoY. Out of that, EUR 804m were sales of products outside Slovenia, meaning that 94% of the total product and services sales were outside the country. Sales volume amounted to 8.6bn of units (tablets, capsules, injections, etc…), representing a 5% increase YoY.
Breaking the sales by regions, Region East Europe, which accounts for 33.7% of the total sales, increased by 4% YoY (or EUR 11.2m) and amounted to EUR 287.7m. Breaking this down further, sales in Russia amounted to EUR 172.7m, an increase of 3% YoY. Meanwhile, in Ukraine, sales amounted to EUR 45.8m, a decrease of 1% YoY. The second-largest sales region was Region Central Europe, which accounts for 23% of the total sales. The region recorded EUR 196.1m of sales, a 4% growth YoY. In Poland, the 2nd largest individual market behind Russia, sales increased by 1% YoY to EUR 88.8m. Sales in the Czech Republic increased by 16% and amounted to EUR 30m. Moving on, Region West Europe, which accounts for 19.7% of the sales, recorded growth of 6% YoY and amounted to EUR 168.5m. In Region South-East Europe, product sales amounted to EUR 119.4m, or 14% of the total sales revenue, which is a growth of 6% YoY. Region Slovenia recorded a sales increase of 6% YoY, amounting to EUR 49.4m. Finally, Region Overseas Market generated sales of EUR 32.5m, which is an increase of 18% YoY.
Meanwhile, looking at the sales by the product type, sales of prescription pharmaceuticals amounted to EUR 709.2m, an increase of 3% YoY, accounting for 83.1% of the total sales. Non-prescription products generated growth of 31% and amounted to EUR 77.6m. Sales of animal health products increased by 5% to EUR 47.2m, while health resorts and tourist services generated EUR 19.4m, up 46% YoY.
Next up, we took a look at the EBITDA numbers, Krka provided both an estimate for the number as well as the adjusted figures. The estimate for the EBITDA in Q2 2022 is EUR 192.4m, which represents a decrease of 25% YoY. However, if we were to adjust this number, we would get an EBITDA of EUR 270.1m, an increase of 6% YoY. The adjustment refers to the fact that Krka continues its business operations in Russia, and has purchased necessary raw materials, materials, and bulk products to ensure the long-term supply of the pharmaceuticals to the Russian market. As the purchases of these items were done in roubles, and as the rouble appreciated significantly in the last few months, the value of these inventories increased significantly, which temporarily reduced the EBITDA. In essence, the adjusted EBITDA numbers do not include provisions for unrealized profit in the inventory of intragroup companies in the amount of EUR 77.7m as a result of the strengthening of the rouble.
EBIT was impacted in the same way as EBITDA, and the Company provided both estimated and adjusted numbers. Estimated EBIT amounted to EUR 139.2m, a decrease of 31% YoY, while the adjusted EBIT amounted to EUR 217.0m, an increase of 8% YoY. Moving on, the net financial result is estimated at EUR 138m, with the net foreign exchange gains from the Russian rouble estimated at EUR 123m. Of that, estimated unrealized foreign exchange gains totaled EUR 116m.
Finally, Krka’s net profit amounted to EUR 236.2m, an increase of 33%. This would also mean that the net profit margin amounted to 27.5%, an increase of 5.6 p.p. YoY.
Krka Q2 2022 key financials estimates and adjusted numbers (YoY, EURmn)
Krka also commented on the new products it launched, its investments, employees, as well as the 2022 business plan. It launched four products and invested a total of EUR 49m in H1 2022, of which more than EUR 35m into the controlling company. At the end of June, Krka had 11,618 employees, an increase of 1% or 107 YoY.
Lastly, taking a look at the 2022 business plan, Krka projects that the 2022 sales will amount to EUR 1.61bn and a net profit of EUR 300m. They plan on investing EUR 130m into investment projects, primarily to increase and upgrade the production facilities and infrastructure, and 10% to research and development.
At the same time, the results might be influenced by a new wave of COVID-19 restrictions, rising prices of raw materials, the situation in eastern Europe, as well as the exchange rate volatility. The Company remains committed to a stable dividend payment policy, which takes into account requirements for investments and acquisitions, and the expected allocation for dividend payment amounts to at least 50% of the net profit.
